It used to be a thing to carry cash around, but now with credit cards, and more recently digital wallets, it’s hard to carry more than a few dollars in your physical wallet.
Unfortunately, that also makes many of us unwilling to show gratitude, especially when traveling, to tip the people who clean our rooms or bring your car.
Austin-based Grazzy wants to change that through its instant payment and tax compliance platform, where people can leave tips for frontline workers that employees can access on the same day. It also provides a recruiting and retention tool for service employers, such as hotels, bars, restaurants and salons, while also giving employees financial wellness tools.
Russell Lemmer, the founder and CEO of Grazzy, told TechCrunch that he was one of those travelers who experiences great services in hotels, but uses his phone for everything and rarely carries cash.
“When I was staying in Las Vegas, I left my bags with the valet and wanted to tip, but I couldn’t,” Lemmer recalled. “I heard the clerk say to his colleagues that ‘this is seven in a row’. I was ashamed and started thinking about a solution.”
In questioning others, Lemmer found he wasn’t alone: The majority of the people he spoke to were also heavy phone wallet users who were once in a position of not being able to tip because they didn’t have cash.
He started working on Grazzy in September 2021, and the result is an app that takes a “business-to-business approach to Venmo,” and a seamless way to show gratitude to someone they don’t know personally, he said.
Lemmer also wanted to help employers reduce hourly turnover, which he says is a $100 billion problem in the US, by giving employees a way to earn and save more. He’s not alone: While the global pandemic exacerbated already difficult conditions for frontline workers, other startups brought in technology to solve certain aspects. For example, Anthill to connect those who never sit at a desk, SnapShift to handle HR, and AskNicely for customer experience.
Here’s how Grazzy works: guests can tip staff instantly using a QR code with the property brand, and the Grazzy Direct feature gives staff instant access to their tips. Grazzy makes money from processing fees.
The platform also monitors and tracks the money so that companies can be subject to tax while also seeing wage increases and the effect on their employees.
Lemmer says Grazzy reduces the wait that often happens with tips through credit card transactions and the need to tip regularly or lower weekly paychecks. In addition, by providing an alternative to traditional cash, Lemmer sees digital tips increase an employee’s earnings by an average of 20%.
Grazzy started with its first major hotel customer last July and there are now about ten. It’s still in its infancy and started generating revenue last month, Lemmer said.
Today, the company announced $4.25 million in seed funding led by Next Coast Ventures and Tuesday Capital. This brings the total funding to date to $6.8 million.
Lemmer plans to use the new capital to accelerate customer growth at other hotel brands, operating groups, restaurant groups and salons, and technology development to integrate Grazzy with major operating systems.
In the meantime, he has a three-year plan in the works, dealing with hotel operating groups that manage hundreds of properties and building out additional financial wellness functions for employees.
“We want to start combining better ways to save and spend,” said Lemmer. “We think this is the next step after helping them make more money and get more of it in the same day. In the long run, they stay in these jobs a bit longer, and it’s a recruiting tool for the employers.”