Investors might like Honey, but it remains to be seen if e-commerce websites will. A coupon company for the web is not a new idea. But Ryan Hudson, who has spent over a decade building companies, has found a way to wow investors.
In 2005, Hudson was featured in Businessweek's "Top Young Entrepreneurs Of Tech" alongside Mark Zuckerberg. He's been creating businesses for nearly a decade including four in the past year or two. But he says he's never seen one take off like his latest venture, Honey.
Honey is a Chrome extension that surfs the web for discounts at the exact moment you're checking out of an e-commerce store.
Before you blow it off, let us explain.
Upon check-out, most e-commerce websites ask if you have a promo code. That's when you realize you're getting ripped off. Many people open a second browser window and hunt for a discount code before making the purchase. The first search result is usually RetailMeNot, a coupon code site. Then they have to dig through a list of suggested codes, many of which no longer work. Most come up empty handed and they may be so discouraged, they never complete their purchase.
But if you install Honey, Honey does that extra coupon-hunting work for you without ever leaving the store's site.
Next to the promo code bar, a golden Honey bar will appear that says "Find Savings." It surfs the web for discount codes and tries multiple ones in just a few seconds.
If it doesn't work, you know you're not missing out on anything. And if it does work, then you're happy you tried.
Honey launched just before Thanksgiving. One of its bug testers on Mechanical Turk was so excited about the product, he leaked it to Reddit in advance. It took off and Hudson's team held its breath, hoping Honey wouldn't crash.
Now Honey has 125,000 installs, all on Chrome, and 97,000 of those are actively using it every week. Honey works on more than 400 websites, and it has hundreds of other e-commerce companies back-logged (there's only so much Hudson and his one other full-time employee can do). Hudson says it's one of the Chrome store's top 10 apps with little to no marketing support. His Chrome extension has already saved users more than $108,000.
"The type of traffic we're seeing is hugely organic," Hudson says. "It's actual word of mouth marketing. People are typing in our url directly."
Hudson is currently raising a round of financing and investors seem to be impressed. Hudson says he was in San Francisco, Calif., last week and nine out of nine investor meetings were successful. As in, each institutional investor either committed money on the spot, or scheduled a second meeting with other partners in the firm.
Investors might like Honey, but it remains to be seen if e-commerce websites will. Most are probably happy to have their discount codes hidden, but Hudson thinks there are enough benefits that they might like Honey. For one, it keeps people from leaving checkout pages. In addition, companies pay coupon websites to refer traffic to them, but very few people actually start their shopping experience on pages like RetailMeNot. So the lead-generation fees e-commerce websites pay are often unnecessary.
While Honey is busy saving people money, it isn't quite sure how it will turn a profit. It doesn't take a cut of any of the money people save. Maybe someday it will. All Hudson is sure of is that he should be putting gas on this fire.
"Nothing I've launched has ever hit like this," he says.