Victor Ho and Matt Doka anaylzed Fortune 500 Loyality programs as part of a team at McKinsey and Company in New York and began to understand why such companies as Safeway poured millions into such programs.
They made money, lots of it.
As a result of their research, Ho and Doka eventually partnered to form "Five Stars Card," a loyality program designed for, but not limited to, small business owners.
Formed in December of 2010, the company has already outgrown two offices and is moving into a bigger space in San Francisco.
Making money was certainly part of their vision, but not the overwhelming mission of the group.
"Victor wanted to start a companmy that impact businesses and help people," FiveStarCard Online Marketing Strategist Gracie Binder said. "We're building a network of local businesses, especially in Palo Alto, and that network effect to help all businesses."
Ho is a Cal-Berkeley grad and Doka graduated from Penn. They moved into an apartment in nearby Mountain View and started planning things.
Pepperdine grad Eric Burdullis became the company's first employee and Cal's Michael Su became their first intern.
The foursome gathered in the apartment, the company's first "office," and worked around the clock developing their product until they had something suitable to start selling.
"Some people make fun of us because we're not really high tech," Binder said. "We wanted to build a company where good ideas win no matter where they come from."
Bender, who graduated from Santa Clara in 2011 with a finance degree, tracked down Ho and Doka and basically recruited herself into the company.
She became aware of the company as an undergrad after picking up one of their cards ("To be honest it was pretty ugly," she said) at Cramer's Bakery, where it was being beta-tested.
"I really didn't think much of it then," said Binder, a Seattle native whose father is a research scientist and mother is a doctor. "But I knew I wanted to work for a start-up and Santa Clara has a great program that brings people together. I wanted a start-up with the right idea."
All along University Ave., there are businesses that have signed on with Five Stars Card. We met at Cafe Epi, visited Cafe Venetia next door, which was using the card for the first time, and ended up at Haagan Dazs, where I obtained my card.
Five Star Card has developed relationships around the nation and has opened or will be opening offices in Seattle, New York, Los Angeles, Dallas, Chicago and Atlanta along with Palo Alto/San Francisco.
"There are clusters everywhere," Binder said. "Palo Alto was the pilot program and we just signed up Highway 55 Burgers and Fries in North Carolina. We focus less on the card and more on the business."
A map on the website will show locations of all businesses who take the card. When I checked it on Wednesday night, there were 22 locations in Palo Alto and over 200 in Santa Clara and San Mateo Counties, including Los Altos, Mountain View, Cupertino, Campbell, Sunnyvale, San Mateo, Foster City, Redwood City, Millbrae, South San Francisco, Belmont, San Mateo, Daly City.
The company just raised another $14 million from venture capitalists DCM and Lightspeed.
Even as the company grows, Binder said the employees remain close. They do tend to work long hours together.
"We call ourselves the Five Star Family," Binder said. "We all sacrifice and we're all in a similar age range. I thought I was going to take the corporate route. After job shadowing a financial advisor I realized it was not for me."
The employees not only work together, they play together. They are often seen at Francesca's Sports Bar in Mountain View for Thursday Night Keoroke.
The following businesses accept Five Star Cards in Palo Alto:
Michael Lucich Salon
Michaela's Flower Shop
Empire Vintage Clothing
The Rose and Crown
HAIR BY MONIQUE
Rick's Ice Cream