With $3.2M in Funding, Fragmob to Expand Multi-Level Marketing App
Jonathan Shapiro says some 100 million people around the world consider themselves to be in the direct selling business—and it goes without saying that just about all of them have smartphones.
San Diego-based Fragmob set out about five years ago to serve that market by developing mobile software that individual sales reps can use at multi-level marketing companies like Canada’s Organo Gold, Mexico’s Grupo Omnilife, and Utah’s LifeVantage. (Organo Gold sells coffee, tea, personal care items, and “nutraceuticals,” while Omnilife and LifeVantage sell dietary supplements.)
Sales representatives for multi-level marketing companies like these typically work independently, and earn income by both selling the company’s products (which the sales rep purchases personally) and by recruiting others to work as distributors.
Some multi-level marketing companies have engendered controversy through their questionable claims and sales practices. But Fragmob’s Shapiro says the business opportunity is huge—the industry generates annual sales of $34 billion in the United States and $182 billion globally.
Last month, Fragmob said it raised $3.2 million in convertible debt funding that will be used for working capital, to hire more employees, and to expedite the development of Fragmob’s mobile, analytics, and e-commerce products. (The Global Technology Fund of Global Trust Group, a a financial services firm based in Las Vegas, NV, led the seed round.)
According to Shapiro, Fragmob had one client and 15 employees a year ago. He says the mobile app developer now has 50 employees and five customers.
And after hosting a two-day technology meeting for the direct sales industry last week at the Andaz Hotel in downtown San Diego, Fragmob said it also had signed two new partnership agreements.
In one deal, Fragmob and InfoTrax Systems of Orem, UT, will work together to integrate Fragmob’s mobile platform technology with the backend operations systems and online distributor tools that InfoTrax has developed for the multi-level marketing industry. In the other deal, Fragmob agreed to integrate its mobile technology with PayQuicker, an FDIC-approved online payment platform based in East Rochester, NY.
Shapiro, who grew up in New Jersey and worked in New York in investment banking and private equity, says he co-founded Fragmob in 2011 with Jade Charles, a San Diego software engineer who specializes in mobile e-commerce and social platforms. Their idea was to develop a mobile version of enterprise software developed for multi-level marketing by companies like Silicon Valley’s AboveGem and Utah’s iCentris and InfoTrax.
“Most companies in the space have legacy software,” for their sales and marketing teams, Shapiro says. “When they go mobile, they usually try to take their Web-based software and port it over to a mobile environment.”
Creating a mobile app from scratch enabled Fragmob to focus on the users’ experience, Shapiro says, saying Charles focused on making the shopping experience as easy as possible.
They named their startup Fragmob, as in “fragmented mobile,” because the mobile sector was initially so fragmented, Shapiro says. But he says the name also alludes to a “frag grenade” because they want Fragmob to “explode on the scene.”
Shapiro says Fragmob conducted beta testing of its mobile software exclusively for one customer. After that contract expired, however, Fragmob decided to provide its mobile software for multiple multi-level marketing customers. According to Shapiro, Organo Gold, Omnilife, LifeVantage, ItWorks, and ViSalus all became Fragmob customers.
Fragmob configures its software for each customer. Shapiro says the compensation plans for the companies are very complicated, but Fragmob configures its mobile software so that sales reps for each company can follow their progress and ranking, step-by-step.
“Our app helps to mentor sales reps,” Shapiro said. “We integrate with the company’s program and provide the information they need so they understand each step a [sales rep] has completed and what they need to do to get to the next level.”
Fragmob’s flagship product is the Frag DS platform. The company says its technology “turns a sales rep’s smartphone into an immediate point of sale, a tracking system for orders, and a guide to the best sales and team actions to take in real time.”