Milwaukee-based SpotHopper Wants to Be Pandora For Watering Holes

Xconomy Wisconsin — 

[Corrected 5/21/14, 8:53 am. See below.] Movie and TV series addicts have Netflix. Adventurous music aficionados have Pandora. But there’s arguably no equivalent go-to mobile app or software program for people who are planning a fun night on the town and want help scouting bars that match their tastes and mood.

That’s what the makers of SpotHopper say they’ve created. The app, which recently went live in Milwaukee, helps users search for a nearby bar, club, or lounge that closely mirrors their preferences, and then recommends specific beers, wines, or cocktails available at those venues. The app also displays current drink specials.

Co-founders Aleks Ivanovic and his son, Niko, got the idea for SpotHopper in 2012 while traveling. They were frustrated that they couldn’t find something that helps people visiting a new city to quickly and easily find a watering hole that’s just right for them—without the typical hassle and time wasted on Web searches and sifting through blogs and online reviews, Ivanovic says.

“We don’t want you to spend 30 to 50 minutes researching, then going to the wrong place, then it kind of ruining your night,” Ivanovic says. “There’s nothing out there that can work like Pandora. …We came up with an algorithm to do that.”

Ivanovic grew up in Montenegro and moved to Milwaukee at age 18 to study electrical engineering at University of Wisconsin-Milwaukee. After college, he worked at Rockwell Automation for six years before founding Webcom, a software company he says he sold for nearly $12 million in 2011 to Pleasanton, CA-based Callidus Software (NASDAQ: CALD). [An earlier version of this paragraph gave an incorrect final sale amount for the Webcom deal. We regret the error.]

Ivanovic’s 22-year-old son is a “big beer geek” who scored high on the MCAT exam, but has dropped plans for medical school in favor of working on SpotHopper, his father says. “My wife was not very happy,” Ivanovic says.

Ivanovic has self-funded SpotHopper so far, and he hasn’t decided if the company will seek outside investment. The startup has set up shop in 96square, the downtown Milwaukee coworking space, and intends to expand the app’s capabilities to Madison, WI, followed by New York City and Denver, Ivanovic says.

The app is free to download, and the startup will make money by charging restaurants, bars, and beverage makers to be promoted in searches. But sponsor venues and products would only show up in a search if they matched a user’s criteria, Ivanovic says. This means that if two beers are a 92 percent match for a user’s preferences and one is a sponsor, the sponsor will show up higher in the search results. In addition, SpotHopper will be able to send push notifications to users advertising nearby drink specials in real time, only charging venues a fee for each customer lured by those targeted ads.

SpotHopper will likely expand its concept and technology to dining next, Ivanovic says, but first it must conquer the bar scene.

SpotHopper’s proprietary algorithm will be a differentiator as the company tries to stand out amongst the myriad bar apps on the market, Ivanovic says. (There are a bunch of apps in this space, although I haven’t come across one trying to tackle the same problem in exactly the same way as SpotHopper. The closest competitor I’ve found is UrbanDaddy’s The Next Move.) Most apps search for bars based on keywords, Ivanovic says, but SpotHopper’s algorithm spits out matches from a series of traits stipulated by the user.

And the program theoretically should produce better matches the more it gets used because it incorporates user feedback, Ivanovic says. For example, if someone tries a particularly hoppy beer and gives it a much lower hoppiness rating than the average SpotHopper user, the app will adjust its future recommendations for that person based on its interpretation of his or her palette.

“We believe we will really get you the best match out there for exactly what you’re looking for, both in terms of flavors and vibe [of the venue],” Ivanovic says.

So does it work? I downloaded the app on my Galaxy S3 smartphone and enlisted one of my good friends to help me test SpotHopper. (Right about now you all wish you had my job, I know.)

After creating a free account, I indicated I was looking for a bar/restaurant and was presented with choices for the temperament of my dream bar/restaurant, ranging from “let’s rage” to “cozy wine bar.” I picked “summer/day drinking” because Milwaukee was finally enjoying near-70 degree, sunny weather on this Sunday afternoon, and I wanted to sit outside.

A level deeper, there was a list of venue criteria that could be attuned to my exact druthers at the moment by dragging a point along a “slider.” On a scale from “chill” to “raging,” I moved the point just left of center. I left it halfway between “college kids” and “nursing home.” Ditto on the spectrum from “dirt cheap” to “Donald Trump.”

In the more “advanced” sliders, I adjusted my preferences closer to retro than modern, all the way toward nice outdoor area, nearly the whole way toward “warm and cozy” (as opposed to “clean and cold”), more social than antisocial, not “fratty” at all, and put strong emphases on beer and “hipster.” (For the record, I can’t pull off skinny jeans and don’t care who discovered which obscure band first, but I share the hipster’s affinity for craft beer and indie music.)

I clicked the search button, and the app pulled up a list of 15 establishments within a 1-mile radius of my apartment, each one marked on the map and showing how closely they match my preferences. I widened the grid to include all of Milwaukee, and my new top choice was Café Centraal, a Bay View neighborhood restaurant that supposedly was a 90 percent match. I’d say the app was spot on. Outdoor patio seating? Check. Beer emphasis? Double check. Slight, but not overly potent, hipster vibe? I’d argue yes.

I decided to search for my drink order from home so I could take my time and write notes without a potentially awkward conversation with my waiter. But this raised my first question about the concept of the app: Once I got to the bar, why would I need the app to suggest a drink when I could just ask my server? It’s true that not every venue has staff with deep beer, wine, or cocktail knowledge, but given the current craft beer and cocktails-from-scratch crazes, bartenders and servers often pride themselves on helping patrons navigate their selection. To wit, our waiter at the Belgian-themed Café Centraal said he knows its 15-page “bier book” inside and out.

In a busy bar or restaurant with hundreds of beers and wines available, servers and bartenders don’t always have the time to explain what each brew or vintage tastes like and make a thoughtful recommendation, Ivanovic says. With SpotHopper, users can save their preferred drink criteria and run that search each time they go out, the idea being they’ll get a faster, more closely calculated result.

“You’re still having that conversation every time you walk into a place. You only have to have that conversation with a phone once,” Ivanovic says.

Whether one prefers an app or a live person’s recommendation, I was satisfied with SpotHopper’s long list of customizable criteria for specifying my perfect beer, and generally happy with the result. I wanted a beer that was more light than dark, more creamy than crisp, slightly malty and sweet, and with low bitterness and hops. (For the truly persnickety drinkers, a further set of options includes beverages made from corn or grain and specific flavors like citrus or grapefruit.) Of the beers on Café Centraal’s menu, SpotHopper said my best bet was the Belgian brew St. Bernardus Tripel—an 89 percent match. I can’t say with certainty that it was the best tripel I’ve ever tasted, but it was still an enjoyable beer and one that I’d consider ordering again.

Sugar MapleAs my friend and I sipped drinks and chowed down on our food, we played around with some of the app’s other features. To be fair, this is SpotHopper’s first version of the app, and the team is working on an update that will incorporate feedback from early users, Ivanovic says. Here are a couple takeaways from the current product:

—The user interface is simple, clean, and visually appealing, but some functions could be improved. Users aren’t required to specify a preference for each category, so if someone truly doesn’t care how loud a venue is or how malty a beer is, for example, he or she can leave categories untouched and it won’t influence the search results. That’s a great idea, but the problem is that once a slider has been tapped, now that category’s preference must be gauged; I couldn’t figure out a way to undo that without starting over.

—We got mixed results using the app’s option to recommend a specific beer, wine, or cocktail that’s similar to a person’s drink of choice. When I asked SpotHopper to suggest an alternative to one of my local staples, Lakefront Brewery’s Wisconsinite, it came back with Blanche de Chambly, made by Unibroue of Quebec, Canada. Both are wheat beers with similar characteristics. After sampling Blanche de Chambly at the next bar (Sugar Maple, next door to Café Centraal and pictured above), I’m adding it to my list of favorites. But SpotHopper also recommended an IPA and a raspberry tart beer a few spots below Blanche—two choices that seemed out of place in this lineup.

Ivanovic says SpotHopper compiles its drink data from several sources: consulting with craft beer experts, sommeliers, and mixologists; inputting a beverage’s characteristics from its manufacturer’s description; crowdsourcing from user reviews within the app; and incorporating staff members’ interpretations of a drink’s “flavor profile.”

“We come up with what we believe is closest to the truth about what that product is really like, then recommend that to a person,” Ivanovic says.

But the app’s success could hinge on building up a critical mass of branded alcoholic beverages (and accurate, detailed profiles of each drink) in its database. As the company attempts to scale beyond Milwaukee to much larger cities, that could be a challenge, especially for a startup that currently has only about 15 employees, interns, and contractors. Why not partner with an online review database like BeerAdvocate or RateBeer to beef up SpotHopper’s catalog? Ivanovic says the API capabilities on those types of websites aren’t up to par yet, and he thinks software that crawls websites doesn’t typically produce robust data sets.

SpotHopper also has its work cut out with its plan to be a resource for shoppers. When standing at the end of an aisle stocked with dozens of types of wine, liquor, and beer, an intuitive guide on a smartphone could be handy.

But that assumes SpotHopper has every local grocery store’s full menu of alcoholic products in its database, which will also take time and effort to amass. SpotHopper has a pilot partnership with Sendik’s Fine Foods in Brookfield, west of Milwaukee, and is in the process of uploading the store’s alcoholic beverage inventory to the app. SpotHopper has also had conversations with Milwaukee-based Roundy’s Supermarkets and a couple of wine distributors, who will recommend liquor stores for the startup to partner with, Ivanovic says.

Ivanovic is confident SpotHopper will continue signing up restaurants and bars, beverage manufacturers, and retailers because the app helps them “attract their ideal customer” and steer them toward desired products at the point of sale. He says bad reviews on Yelp and other websites are largely a result of “mismatched expectations,” and that a good recommendation app can prevent such episodes. “So if I have a dive bar, I want to bring people in that like dive bars. Then everybody’s going to have a great experience.”