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Lantern: Founder Context & Positioning ​

Overview ​

This memo establishes founder context, competitive positioning, and the strategic narrative for Lantern's San Diego pilot and beyond.

Founder Context 👤 ​

Lead (You) ​

  • Current role: Web/app analyst at YouTube
  • Background: Web design and product experience
  • Why this matters: Deep understanding of how users discover and engage with locations; experience building scalable platforms; design sensibility ensures frictionless UX
  • Unique advantage: YouTube network and cross-functional insights into monetization and creator partnerships

Co-founder (Partner) ​

  • Current role: Service industry professional (operations, hospitality, or venue management)
  • Background: On-the-ground relationships in hospitality/retail
  • Why this matters: Direct access to merchant pain points, operational workflows, and venue networks; credibility in customer conversations; low CAC through referrals
  • Unique advantage: Insider knowledge of what venues want (foot traffic, customer loyalty, data) and what they'll never pay for

Complementary Skills ​

  • Technical: You (product, design, analytics)
  • Commercial: Partner (merchant relationships, operations, retention)
  • Team: Contractor/support to handle onboarding and QA during pilot

Result: Ideal founding team for a merchant-first, location-based product. Avoids the trap of pure engineers building for users they don't understand.

Market Problem & Why Now 🎯 ​

The Problem ​

Merchants (especially independent cafés, bars, small retail) struggle to:

  1. Drive foot traffic and repeat customers economically
  2. Compete with chains that have massive marketing budgets
  3. Understand who their customers are and what they want
  4. Offer experiences (not just discounts) to build loyalty

Users struggle to:

  1. Discover quality independent venues (Yelp is cluttered; Groupon is discount-heavy)
  2. Seamlessly check in and redeem offers without friction (apps, QR codes, paper coupons)
  3. Find serendipity and social connection at places (Foursquare is dead; Instagram is passive)

Why Now? ​

  1. PWA maturity: Frictionless mobile experiences without app store overhead
  2. Geofencing accuracy: GPS and location APIs now enable accurate proximity-based features
  3. Post-COVID venue recovery: Hospitality venues are aggressive about acquiring customers; willingness to experiment with new tools
  4. Merchant tech adoption: Small businesses increasingly use Stripe, Toast, Square—openness to integration
  5. Social rediscovery: Gen Z and millennials return to venues for in-person experiences; location-based discovery matters again

Competitive Landscape 📍 ​

Established Players (Why They're Vulnerable) ​

PlayerStrengthWeaknessOpportunity
Yelp (Deals)Huge user base; reviews integrate with offersHigh merchant friction; poor ROI perception; complex interfaceLantern: simpler offer creation, lower fees, merchant-first UX
GrouponProven unit economics; brand recognitionMerchant resentment (low margins); perception as discount-onlyLantern: focus on repeat customers, not one-time deals
Toast / SquarePOS integrations; rich analyticsTargeted at enterprise; high CAC; not acquisition-focusedLantern: pure acquisition and loyalty, cheaper to integrate
Foursquare / SwarmPioneered location + socialDeclining daily users; merchant adoption fell off; no monetization for merchantsLantern: clean monetization, user engagement via Wave, modern tech

Emerging Competitors ​

  • TikTok Shop / Instagram Shops: Growing; could add location features; but not specialized for venues
  • Local niche platforms: Micro-communities (e.g., neighborhood apps); small scale, low threat in 2026

Why Lantern Wins ​

  1. Purpose-built for venues: Every feature (Wave, check-in, offers) is designed for in-person discovery
  2. Merchant-first monetization: Offers revenue models (flat, PPC, subscription) with healthy margins for merchants
  3. Frictionless UX: PWA, no app install, one-tap check-in and redemption
  4. Network effects: Wave (social discovery) + check-ins create user stickiness; loyalty features reduce merchant churn
  5. Founder advantage: Service industry co-founder means merchant relationships and real feedback loops

Strategic Positioning 🚀 ​

Positioning Statement ​

For independent hospitality and retail venues, Lantern is a customer discovery and loyalty platform that drives foot traffic and repeat customers with minimal friction, without requiring complex integrations or high fees.

Unlike Yelp (cluttered, user-focused) and Groupon (discount-focused, merchant resentment), Lantern prioritizes merchant success and sustainable unit economics.

Narrative Arc (Investor / Strategic Pitch) ​

  1. Problem: Merchants want customers; users want discovery. Traditional tools (Yelp, Groupon) serve one or the other, not both.
  2. Solution: Lantern is a purpose-built venue discovery + loyalty platform for independent venues and their communities.
  3. Proof: San Diego pilot (5–10 merchants, 50+ redemptions, 70% NPS) validates product-market fit.
  4. Expansion: Phase 2 expands to LA, SF, Austin; phase 3 adds subscription analytics and payment services (becoming SaaS/marketplace hybrid).
  5. Exit: Acquired as merchant loyalty platform, or standalone at $50–500M valuation (similar to Toast, Square, Foursquare at peak).

Why San Diego? 🌴 ​

Geographic Rationale ​

  • Market size: ~100K hospitality / retail venues; 5–10 walkable, high-traffic neighborhoods
  • Partner advantage: Direct network in San Diego service industry = low CAC, high trust
  • Diversity: Mix of coffee shops, bars, upscale dining, casual retail
  • Tech adoption: California users familiar with PWA, location apps, digital loyalty
  • Competitive: Yelp and Groupon present but underserving independent venues
  • Replicable: Success playbook transfers to LA, SF, Austin, NYC, Chicago

Why NOT a larger market first? ​

  • Execution risk: Distributing across cold markets requires expensive merchant sales team
  • Founder leverage: Partner's network accelerates first 5 merchants; scales faster than cold outreach
  • Data quality: Concentrated market allows daily feedback loops; easier to detect fraud and optimize

Narrative for Merchants 💼 ​

When Recruiting Your First 5 Merchants ​

Script:

"We're building a free, frictionless way to drive foot traffic and loyalty. Check out how it works:

  1. Create an offer (e.g., 'Buy 1 drink, get 50% off when you check in on Lantern')
  2. Users who are nearby see your offer, check in with one tap, and redeem
  3. You get a redemption token; user gets their discount
  4. You see metrics: how many saw the offer, how many checked in, how many redeemed

Cost: We're testing two models—pay $150 for a weekend campaign, or $1 per verified redemption. You pick.

Risk: If it doesn't work, you've only spent the cost of the coupons you already give out. If it works, you have proof for future campaigns.

Upside: Even 10 repeat customers this month is worth it. And you get data on who they are and when they come."

Why This Works ​

  • Free to try: No upfront cost if you go PPC; low cost if flat campaign
  • Proof of value: Real redemptions = real data
  • Competitive advantage: Your competitors aren't on Lantern yet
  • Timeline: "Help us test this for 90 days" feels like collaboration, not a long-term commitment

Narrative for Users 👥 ​

When Growing User Base (Post-Pilot) ​

Hook: "Discover independent venues near you and get exclusive offers when you check in. See where your friends are hanging out (Wave). Earn rewards."

Core features:

  1. Discovery: Browse nearby venues (sorted by relevance, check-ins, your friends)
  2. Wave: See your friends at venues; join them or be spotted later
  3. Check-in: One-tap check-in for offers and loyalty
  4. Rewards: Badges, loyalty streaks, redeemable offers

Why this appeals:

  • Social rediscovery: Serendipity element (Wave) missing from passive apps like Instagram
  • FOMO: Friends at venues = reason to visit
  • Loyalty without friction: No loyalty card; one app for all venues in your city

Success Metrics & Key Questions 📊 ​

Pilot Success Criteria (Weeks 0–12) ​

✅ Must achieve:

  • 5–10 merchants signed and live
  • 50+ verified redemptions across merchants
  • Merchant NPS >= 50 or "would pay again" >= 70%
  • Fraud rate < 5%
  • 1+ merchant cohort renewing offer after 30 days

⚠️ If we miss these: Product-market fit signal is weak; pivot to B2B SaaS or feature licensing.

Unit Economics Targets (Phase 2, post-pilot) ​

  • CAC: < $1,000/merchant (via referrals + partnership)
  • LTV: > $1,200 (ARPU $150/mo, 8-month average retention)
  • LTV:CAC >= 1.2 (path to 3:1 with scale)
  • Redemption rate: 25–40% of check-ins

User Growth Targets (Phase 2, post-pilot) ​

  • Monthly active users: 5–10K (San Diego, months 4–6)
  • Check-in rate: 5–10% of venue impressions
  • Wave adoption: 30%+ of users have friends (indicate stickiness)

Potential Objections & Responses 💬 ​

ObjectionResponse
"Yelp and Groupon already do this"Yes, but neither prioritizes merchants or has frictionless UX. Yelp clutters users; Groupon breeds resentment. We're merchant-first and app-free (PWA).
"Why should merchants pay when Yelp is free?"Because Yelp is user-focused; Lantern drives action (check-ins, redemptions). You pay for results, not exposure.
"What if users don't check in?"Fair risk. That's why we test with Wave (social discovery) and gamification (badges, streaks) to drive engagement. Pilot will validate.
"Fraud risk is high"Agreed. We combine geofence verification, QR codes, and behavioral heuristics. Pilot will show if fraud exceeds 5% threshold.
"How do you compete with TikTok / Instagram?"We're not; they're passive. We're venue-native: check-in, real-time, social context. Complementary, not competitive.
"Isn't this just a loyalty app?"No. Loyalty is one layer. We're a discovery platform (like Yelp) + social network (like Swarm) + payment/redemption (like Groupon), optimized for venues.

Investment Narrative (If Fundraising) 🎯 ​

Market Size ​

  • TAM: 1M+ independent hospitality / retail venues globally
  • SAM (serviceable): 100K venues in US major metros (10–15 cities)
  • SOM (achievable by year 3): 5–10K merchants, $10–50M ARR

Business Model ​

  • Merchant monetization: Flat campaigns ($150), PPC ($1 per redemption), subscriptions ($50–500/mo)
  • Margins: ~90% gross (software), 60%+ operating (post-scale)
  • Path to profitability: Positive unit economics by month 18 with 500+ merchants

Funding Ask (Example) ​

  • Seed (Year 1): $500K–$1M for pilot + phase 2 (San Diego, LA, SF)
    • Team: Hire 1 merchant success manager, 1 engineer
    • Marketing: Targeted merchant acquisition, partner outreach
    • Tech debt: Analytics, fraud detection, integrations
  • Series A (Year 2): $3–5M for geographic expansion + product features
    • 5–10 cities, recurring revenue baseline
    • Team: Sales, marketing, customer success
    • Product: Merchant SaaS dashboard, payment integration

Why Now? (Timing) ​

  1. Hospitality recovering post-COVID; venues desperate to acquire customers
  2. PWA technology mature; no app install friction
  3. Geolocation APIs reliable; hardware ready
  4. Founder team in market; relationships + credibility
  5. Competitor weakness: Foursquare declining, Yelp stagnant, Groupon merchant-unfriendly

Next Steps & Immediate Priorities 📋 ​

This Week ​

  • [ ] Confirm partner's top 3–5 merchant targets (personal relationships)
  • [ ] Plan outreach: calls, demos, terms discussion
  • [ ] Finalize MVP scope: what's built, what's stubbed (see BUSINESS.md, PILOT_STRATEGY.md)
  • [ ] Set up Stripe test account; integrate into offer form

Next 2 Weeks ​

  • [ ] Close 1st merchant; launch offer
  • [ ] MVP dashboard live (create offer, view check-ins, CSV export)
  • [ ] QR code generation + redemption UX tested
  • [ ] Onboarding email template & support runbook

Weeks 3–6 ​

  • [ ] Close 4+ additional merchants
  • [ ] Collect 50+ redemptions; monitor fraud
  • [ ] Weekly merchant check-ins; gather feedback
  • [ ] Prepare A/B test: flat vs. PPC pricing

Week 12 ​

  • [ ] Final report: NPS, renewal intent, revenue, churn, fraud
  • [ ] Go / no-go decision on phase 2
  • [ ] Pitch deck update (if fundraising)

This memo is your founder story. Share it with advisors, potential merchants, and investors. Update it quarterly with pilot data.

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