Louisville tech startup Red e App is finding a responsive market for the mobile business messaging platform it created for workplaces whose employees who aren’t desk based, and thus harder to communicate with.
As a contained business communication app, Red e App addresses multiple issues that arise from relying on email and other older traditional modes. It is secure; companies control employees’ access, removal and can wipe their data; outsider can’t see or send into the system; every message is read-verified to ensure it’s not missed; and it uses employees’ devices rather than the company’s.
Founder/CEO Jonathan Erwin said the growing company has raised $2.5 million from about 20 investors and expects to raise another $4 million to $6 million in 2015 and early 2016 as it continues to scale up.
Red e App began in March 2011 with three employees and had 18 in its NuLu workplace in mid-April, which Erwin said moves the company slightly past being a start-up – the indefinite time period when entrepreneurs are trying to assemble the financial means and a team to bring an idea to market and begin operations.
“We’re scrappy, but we’re early stage scrappy,” he said, smiling broadly. While still working very actively to attract investment capital, the company has transitioning from the idea-and-fundraising stage to true operations.
“To graduate from ‘start-up’ is to grab the baton,” Erwin said, and truly begin running.
There are many smart investors looking for people with great ideas, and there are many people with great ideas, he said, but investors’ goal is finding those who have not only an idea but business skills.
“Do you have the perseverance and the stamina?” Erwin said.
Some 40 organizations ranging in size from 30 to several thousand employees now are using Red e App for their business communications, which can range from informing scattered personnel of their work schedules to revising everyone’s employee handbook without printing and distributing any physical pages. Users include General Electric Appliance Park in Louisville; Papa John’s International; Hosparus Hospice of Louisville, which has 400 employees; Seminole Gaming, a Florida-based operator of seven casinos, and Rio Tinto Group, an Australian mining company
“We are having some of the biggest companies in the world calling us,” Erwin said.
“Match the technology to the user”
Prospective users include any business with employees who either don’t have an email-friendly work station or are too physically active to check it. This broad potential market encompasses hospitals and clinics, manufacturing, food service, retail, warehouse, transportation, hair salons and much more. Communication becomes more difficult as a business’ number of employees grow and especially when they are never all in the same place at the same time.
Of course, communication still must take place regularly.
The means to accomplishing it vary widely: Work shifts are posted on bulletin boards. Message trees are executed through layers of managers to front-line workers, by mouth, phone call, text message and email. Closed-circuit television presents talking heads, graphics and other video. Dedicated company Internet portals present new information and reference material. Copies of printed messages are stuffed into pay envelopes.
Email is today’s most common method, and it can be effective. But many employees do not have email and many others have inboxes that are hopelessly overflowing.
The result of these various problems, said Patrick Goodman, chief product officer at Red e App, can range from message distortion in tone or content to non-communication. Even in an office workplace where everyone has a desk and company computer and email – where the typical day begins with coffee, email and responses – a manager who sends an important email can have to spend too much time following up to see if everyone received, saw and read it.
“The problem is to match the technology to the user behavior,” Goodman said.
Success came after “the pivot”
Red e App has evolved significantly since Erwin began with a general notion of developing a mobile-based messaging product. He had been involved in hosting.com, a former Louisville digital technology business acquired by a private investment group in 2009.
Apple had introduce the iPhone and its “applications” in 2007. It followed that in 2010 with the iPad tablet, and this new universe of smart phones, tablets and the mobile Internet propelled a blooming of new businesses such as Facebook, Twitter and others.
The general economy may have still been staggering from the late 2008-early 2009 recession and economic crisis, but Internet-based business was “in full swing,” Erwin said.
“I knew I wanted to be in mobile,” he said, and began his business in 2011.
As he and Goodman met with and presented to various businesses in Louisville, however, they got feedback that the business market wanted a private mobile messaging platform – not the public system Red e App was developing. They realized they need to make a big pivot.
This somewhat painful dawning occurred in 2012, Goodman explained, when human resource managers with a local healthcare company complained that they had no way to communicate with 80 percent of their employees.
“You realize the market wants something different than what you have,” Goodman said, and this came about the same time the start-up also was facing its own major issue: “We have to make some money.”
“The pivot,” as Erwin and Goodman call it, occurred, and Red e App then began to hit its stride.
Valuable input came from the operators of a Louisville hair salon, Goodman said, who explained that email was not only too expensive for them, but regular employee turnover made it difficult to keep up with having new accounts activated and turned off through their IT service providers.
Additionally, company email accounts were subject not only to streams of non-work messages, such as when workers sign up for marketing deals or sports reports, but also to spam and even to security threats, such as phishing campaigns.
“When you get a message on Red e App, it is always about work,” Goodman said. They designed in read-receipt for every message that “you can never turn it off,” he said, because managers too often are told their messages either weren’t seen or never arrived.
Silicon Valley wouldn’t understand
Since the app system was designed from the outset to be very secure, Red e App messages comply with the federal Health Insurance Portability and Accountability Act of 1996. This allows healthcare personnel to use it to discuss or pass along private medical information, even attaching images of scans.
While individual employees must download and install Red e App on their own mobile device, they may gain access to their company’s private channel only after the employer has provided Red e App with a unique identification. The employer’s control over individual user accounts includes the ability to wipe all company messages from a user’s mobile device and close the company channel when an employee leaves.
Red e App has a special alert tone to notify employees of emergency conditions.
Goodman said that Kentucky’s overall work environment with a higher proportion of healthcare, manufacturing, distribution and other non-desk, non-office jobs played a role in the creation of Red e App, a digital tool one might expect to originate from Silicon Valley.
“This technology could not be born on the West Coast,” he said. There are simply fewer workplace communication issues there, and the work culture is so different that potential investors probably wouldn’t relate to the need for the product.
However, research consistently finds that communication problems top the list of employee dissatisfaction issues, said Amee Kent, marketing director for Red e App.
Pricing varies somewhat based on industry and how that industry is accustomed to budgeting for operational expenses, Kent said. For example, manufacturing usually approaches such costs on a per-employee basis, but restaurants and retail typically budgeting by the store.
Red e App’s pricing per user per month is similar to most Software as a Service models and less than implementing email, Kent said. It is free for individuals to download, and the employer pays for the service. Pricing starts at $5 per user per month and is discounted based on employee volume.
Mark Green is editorial director of The Lane Report. He can be reached at [email protected]