Creators Hope Schwag App Becomes “Big Win” for Long Beach Tech

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All images and photos courtesy of David Black.

The idea came to Long Beach native David Black years ago—1979, precisely.

He was in New Zealand, a recent Cal State Long Beach (CSULB) dropout, exploring the world on an exhilarating trip in search of big waves, inspired by the iconic surf film The Endless Summer.

“I was living in this place called Raglan,” Black said. “I was living on probably a quarter acre piece by the ocean [...] It cost me about $100 a month, but I ran out of money.”

To start pumping some funds into his bank account, Black and his friends started a radio station on a busy street in the town outside of Aukland, entertaining the crowds who stayed out late into the evening. It was summertime in New Zealand (winter for the U.S.), with the sun setting at 10:30PM every night.

Then it hit him.

“As a marketing major I figured, why not market to people with money in their pockets near your business?” Black said. “I would go into all the stores and ask, do you want to run an ad tonight? And once they got over this weird Yankee coming in with this funny accent asking for money, they were like ‘Yeah, I’ll do an ad tonight,’ and they gave me $10 and I’d run the ad all night.”

Black said by running these deals, using the “Loss Leader” advertising strategy (in which a company sells a product below its market cost for a short amount of time to stimulate business), he was making $300 a night.

“So I was making a lot of money,” Black said with a smile.

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David Black on his surfing trip around the world. 

Such is the inspiration behind Schwag, an app that Black and co-founder Jim Grubbs began developing in September 2014.

Schwag, similar in aesthetics to and perhaps easily confused with Groupon, markets flash sales for various companies and services in the direct vicinity of the app user, using the phone’s location to customize the site’s sales. Schwag’s large differentiation with Groupon is the company’s personal extension of a short-term sale, instead of Groupon’s advertisement of the same deal for a long period of time.

Black said he created Schwag to allow the merchant to customize the short-term sale by creating a specific event and customizing the location range, so people within just a certain mile radius can be alerted about the sale.

dfb photo1“The idea of it was to be hyperlocal, time-sensitive flash sales,” said Black. “So Groupon—they don’t do that. A lot of people think, ‘Oh, that looks like Living Social or Groupon,’ but those are just deal apps. Our app lets you do whatever you want.”

Another handy feature included in the app is a direct transfer to the Uber app, so that visitors can find a way to get to the business offering the deal. Black said the team also plans to provide analytics and performance metrics, showing businesses how many of the app users actually traveled to the business and took part in the flash sale, gauging the effectiveness of the application. More features will likely be added as the app evolves.

So far, Black says the app has 3,000 users and has recruited about 165 Long beach businesses. Participants include the Boathouse on the Bay, Legends Sports Bar and Mahé in Seal Beach. The app is also set to expand to Catalina in 2016, according to Black, and has other cities in mind for further expansion.

While the app is technically a Minimum Viable Product (MVP) and is in its first round of funding, looking to raise $2 million, Black said he hopes to minimize the seed funding portion of the app startup process (usually multiple rounds of funding are involved). He said he plans to do this by increasing user downloads (their goal is 5,000 to 10,000 users in the coming year), which will then allow the company to charge businesses that have enrolled in the app for their participation, on a month-by-month basis.

Jeff Algera of Principal, a Long Beach-based app development company, took stock of the app at the Post’s request, praising its look and functionality.jim

“It has a decent track record of positive reviews, which is also good,” Algera said. However, Algera said that given Schwag’s “well-funded” competitors like Groupon (despite its differences) their endeavor as a self-funded team may be difficult.

“I'd love to see Schwag start an expansion plan in the high-dollar, high-spend SoCal area, specifically Santa Monica and [the surrounding area],” Algera said. “On-demand is huge and Schwag is positioning themselves to participate. Would love to see [venture capitalists] vouch for their business model with a seed fund and see some exponential growth beyond Long Beach and Catalina.”

Schwag should quickly appeal to Long Beach residents, given Black’s history and presence in the city. Born and raised in Long Beach, he grew up on Naples and graduated from both Wilson High School and (eventually) CSULB, between various business startup ventures.

Black laughed as he recounted Long Beach’s evolution. He said as a busboy at the Hindquarters in high school, where the Naples Rib Company now sits, he and his colleagues and were expected to light the cigarettes of restaurant patrons as soon as they took out a cigarette, meaning to light up.

“We carried lighters in our pockets,” he said, shaking his head.

In 1982, Black dropped out of CSULB to start Gondola Getaway, selling his share in the company around 2010 to his business partner. Long Beach residents see the gondolas cruising around Naples to this very day, a testament to the business’s success. Black also started a restaurant, Ragazzi, which is no longer in operation. Since 1999, he has earned the bulk of his living from his full-time job as a real estate broker, a job he continues to this very day while dreaming up other businesses on the side. 

“There’s always time to start a business. It’s fun,” said Black.

Black said he’s seen a palpable shift in the attitudes of the current administration toward small businesses—something he’s keen on increasing, and something he said was noticeably absent when he founded his other businesses.

“The city has turned a corner in wanting to help businesses,” he said. He said he used to walk into City Hall as a small business owner and was greeted by cold officials.

“Now it’s changed,” he said, citing the Innovation Team (it-team) and Mayor Robert Garcia’s commitment to boosting tech in the city. He said with the attitude shift, he hopes changes involving business startup fees and global attitudes about Long Beach change. He said a blossoming tech culture would be a boon to the city, putting it on the map and resulting in countless improvements, besides the obvious economic boost.

And Schwag definitely plans on being a part of this tech company foundation in the city.

“There’s a lot of reasons why Long Beach would really succeed at this,” said Black. “They need some big wins. They need some business they can say ‘this came out of Long Beach.' We certainly want to be one of those big wins.”

To learn more about Schwag, visit their Facebook and Twitter pages. To download the app, click here.

Above, left: David Black. 

Above, right: Schwag co-founder Jim Grubbs. 



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