By Paul Wickers, Founder at Huggg
When I left my banking job to start indie coffee shop chain Huggg, I thought I was prepared for the challenges I would face. Then the pandemic hit and effectively shut my business down overnight. I was left with 3 options – give up; hunker down; or stand up and fight!
My background is in corporate banking. In 2015, I was managing a deal and it became clear that the way people sent greeting cards would change. I started to develop a consumer app proposition that would allow people to ‘send’ someone a coffee using a digital voucher that could be redeemed locally to them. I left the bank a year later to concentrate on this full time, with some funding from business angels and the money that me and my wife had saved to build our dream home.
We went live in 2017 initially in Bristol with 20 independent coffee shops.
In 2018 we got some venture capital investment which enabled us to target a larger area and we signed up over 100 outlets in London. The momentum continued in 2019 when we signed our first national coffee shop chain – Caffè Nero!
The vast majority of our customers were using the Huggg app in a work context – sending coffee vouchers/codes to colleagues and clients, so we switched to a B2B offering. We now had 1,300 locations signed up and our plan for 2020 was to raise funds and continue to grow….
And then the pandemic happened and suddenly coffee shops were closed. We had nothing to sell, lost out on closing a funding round and only had enough cash to operate for 6 weeks.
The first thing we did was decide to change our ‘hospitality gifting model’ to a more e-commerce-like platform with items that could be physically delivered, as we figured that companies would be looking at ways to support and engage their teams who were suddenly remote workers. This made us less impacted by the pandemic and we created a carefully chosen range of new gift types and have continued to build this model.
Meanwhile, I had a chance conversation with a colleague whose brother worked in a school. As part of the preparation for school closures there were concerns about the 1.7 m children who were reliant on free school meals – often as their main source of nutrition. Apparently, schools were raiding their coffers to buy supermarket vouchers to help these families. Our platform was suited to do this at scale and we had supermarkets onboard and a new offering within 2 days. We hit the phones and in the first day our platform supplied £100k of vouchers.
The next day the Government announced that it was partnering with a French company to issue these vouchers, as they had an existing purchasing agreement. We were sad but had proved that there was a real future in our B2G model. On the back of this we secured more funding and our investors praised us for ‘not giving up.’
A lot of people had seen our pro bono COVID-response work and The British Red Cross got in contact to ask for help in changing from only supplying physical food parcels to dispersing grocery vouchers, enabling better recipient choice and fresher produce.
This was the start of our B2G platform which allows organisations to send retail and cash vouchers at scale to those in need, helping local authorities and charities get vital funds (such as the HSF) quickly and efficiently to recipients. These are used for groceries, clothing, essential household items and anything else they need to live, including paying energy bills. So far it has served up millions of vouchers to people in need, dealing with a redeemed voucher once every 15 seconds.
So, in short, yes things didn’t go to plan but we adapted, at first to survive and then to thrive. Hopefully my story will provide encouragement to anyone who has a good idea and just won’t give up.