#76 - Meet the Startup Transforming Mobile Shopping With AI

Welcome back to the podcast, everyone. This is The Tech Optimist, a show brought to you by Alumni Ventures, a show where we discuss the people, technology, and innovations shaping tomorrow.

I truly believe mobile apps are going to be the future. And I know when I joined Shopify, it was kind of the same thing. I said, everyone's going to start shopping on mobile.

That is Ross Correa, co-founder and CEO at Reactive.

I thought retail, you know, and that has been the case to a certain degree. I think e-commerce has definitely spiked. But I think I see the same pattern with, with mobile apps.

You know, with that type of saturation, understandably, you know, we saw this sort of surge in customer acquisition costs from, from the brand side.

And— And that is Mira Oak, partner at Alumni Ventures.

I think that was sort of this constant complaint, right? This frustration that, you know, how are brands sort of expected to compete when, when the costs are just so high. And so, and that's sort of what I think was so exciting about the Reaktiv opportunity to me.

So if $1.1 trillion were in $100 bills, it would weigh— this is a real stat, everyone— it would weigh approximately 11,000 tons. And that's me. My name is Samantha Herrick, the guide for this podcast. All right, you guys know what time it is. Welcome back to the show. Um, today I'm gonna give you a little bit— another snippet into Reactive, the startup that is here today. So Reactive is a Toronto-based startup that has recently emerged from stealth mode with a focus on providing an AI-powered mobile commerce platform. So recently Reactive has announced a $5 million seed round led by Bonfide Ventures, and it was founded in 2023 by Shopify alumni Ross Correa and Zach Elias. Um, so as I had said, you know, it offers an AI-powered mobile commerce platform, but some key features here that I really want to bring up. So there's no-code mobile app builder. So this allows e-commerce merchants to create mobile apps without coding skills. AI-powered customization, that's pretty self-explanatory, but it can generate a mobile app from an existing website. And then we have reactive clips. So reactive clips are a standout feature that can, that can create a functional section of a client's app within an advertisement or social media post without requiring users to download anything. This could be huge, you know, grasping those customers while they have them within their scroll and within, within their scrolling and within their feed. So it also has customer engagement tools, so it's designed to improve sale conversion rates. And they also have integration with Shopify, so it's available in the Shopify App Store. As far as traction goes, right, Reactive claims its waitlist reflects $1 million in US annual recurring revenue, and they've already generated $100,000 from that waitlist. Some current customers include Camp Moore, Missouri Star Quilt Company, Top of the Morning Coffee, and Canadian online perfume retailer Fragrancebuy. So The team started as a bootstrap team of 10 people, and then since August of 2023, they've added 18 employees and they plan to hire more in the future. Of course, future plans— the seed funding will be used to further Reactive's engineering efforts, bring Reactive Clips to market, and to enhance the platform with more AI-powered features and developer tools. Reactive aims to revolutionize mobile commerce by providing an easy-to-use AI-powered platform for merchants to create and manage mobile apps, potentially disrupting the commerce space and its innovative approach to mobile shopping experiences. So that's all for me. We're going to hop into an ad and then hop right into the interview with Ross and Mira. So hang tight.

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Hi everyone. Welcome to the Tech Optimist podcast. Today we are joined by Ross Correa, the CEO and co-founder of Reactive, a promising early-stage company in the portfolio, and one I've had the pleasure of working with for over several months now. So welcome, Ross. Hello,

hello. Nice to be on the podcast. Thanks for having me, Mira.

Awesome. All right, well, let's kick things off a little bit. And I could never do this justice, so I'm gonna ask you to tell us a little bit about Reactiv.

Yeah, let's do it. So, Reactiv, we're an e-commerce platform. We focus on mobile apps. We have a pretty big hunch that mobile apps are gonna be the future. You know, I talk to anyone these days, they tend to do most of their shopping on their mobile phone. It's kind of ironic because most of us at the company, we still do a lot of our shopping on the desktop. I kid not, mostly for airplane tickets or hotels. But some crazy people, most crazy people do that on their phones. And we see a future, a very soon future where all shopping is done on your mobile phone. And rather than it being done in the browser, which tends to have tons of Pop-ups, it's slow, it's clunky, sometimes doesn't work, and then you have to go back to your computer. We're building mobile apps. And I know whenever people think of mobile shopping apps, our minds go back to 2010 where everybody launched a mobile shopping app and it was just a, a web version of their website. There was no true value. We are completely changing that. We're really focusing on providing as much value to the customer, the end user, and to the brand in terms of data and retention, getting that shopper to shop over and over again. So that, that's what we're focused on. Of course, we've got AI powering the entire thing, solving a lot of the problems that previously we'd throw people at. We have some amazing tech, we've got almost 30 people on the team now. It's— and it's only been one year. It's crazy.

That's wild. And I have to call out that I'm one of those crazy people, Ross, that, you know, makes some of those big purchases on my phone now just because of the ease with which, you know, companies have brought that to me as a consumer. So I'm I'm calling myself out here.

I love it. And that just, that just means it's getting better and better because I think 5 years ago, if you were to think, hey, I'm going to book this flight ticket on my phone, people would be like, you're crazy, don't do that. But now everyone's doing it. It's just, it's getting better and better and better.

That's awesome.

All right. And we are going to take a few seconds and hop over to Reactiv's fairly new YouTube channel. Now, they have sat down with, you know, some of the companies and some of the e-commerce, you know, innovators that they work with. And have just talked to them about their business and how Reactiv has helped them sort of grow and innovate in this e-commerce space. So, I'm going to share a clip from Reactiv's YouTube channel. This is with the CEO behind Med School Bro. Yep, you heard that right. The company's name is Med School Bro, but they're a really cool company. They help provide med students and any, you know, people who are looking to get into med school with like study supplies. Being within the social media space was huge for them because most of the time their customers are already using the social media. So Reactive really helped them cultivate their system or their business or their, you know, shopping sector within these spaces where their customers are very frequently. So, um, I'm gonna turn my mic off and sort of let, uh, Reactive and, you know, their client and Med School Bro take over from here. But Yeah. So sit back, relax, and enjoy.

My name is Brandon Portenoff and I am the co-founder of Med School Bro. Med School Bro is an influencer creator brand. We sell educational resources, study guides, flashcards, PDFs to med students all over the world. There's a lot of old and archaic textbooks in the current education system, and the industry has been ripe for innovation. And so one of the things that we bring to the educational space, specifically with medicine, is a fresh and new fun way to study for your exams. And what we found is that it leads actually to better results than using the regular resources that have already been out there. Most of the people being introduced to us are on their phones. So naturally, when people are shopping on our website, they're all browsing on their phones. So one of the first things we thought about was if most of our shoppers are already using their phones, wouldn't we want to give them a superior customer experience, which is, you know, in the form of a mobile app, which is one of the reasons we wanted to build one. One thing I really love about the Reactiv team is it kind of just feels like an extension of your team. So, you know, working with them, they're super responsive. And honestly, it's been really easy and there hasn't really been any sort of learning curve or onboarding process per se. It's all been like a super seamless, super seamless transition. The one thing about Reactive Clips that piqued our interest was the fact that it actually reduced the friction for shoppers to even have to download our app. So with the Reactive Clips, we're able to give our shoppers that mobile experience and without them actually having to download the app. They of course can after if you want, but it kind of removes that friction. The other great thing is that we're able to also send push notifications to people who use the App Clips. So it will work really great with things like abandoned cart and abandoned browse push notifications where, you know, a lot of the time when someone goes to our website, we don't have their email. So we can't send an abandoned cart or an abandoned browse email and we kind of lose them forever. But with reactive App Clips, we can actually, you know, capture that potentially lost business.

Very cool. So I think actually one of the first things that really struck me when we first met was, was your founding story. And so I'd love to hear a little bit about you and your background, and, or I'd love to share that with our listeners. And also, I, you know, wanted to call out like the dynamic that you have with your co-founder, Zach. So I just would love for folks to hear, you know, how Reactiv came to be and then sort of a little bit of how you and Zach got to know one another.

Yeah, I would love to. So I've been in the e-commerce space for over 10 years now. It's all I know. For better or for worse. I used to be a merchant. When I first started, I was in the food space. I do not recommend that to anyone. If you're in that space, I sympathize with you. It is so tough. We were making a beef jerky product, and it was no preservatives, no sulfates, no nitrates, which means it just goes bad really quickly. And we tried to sell that on grocery store shelves. You can imagine where this story ends. And grocery store shelving, it costs so much money to get your product there. We pivoted and we started selling online and I found Shopify and I was like, this is the greatest tool ever. I fell in love with Shopify rather than the product that we had. And a couple of months later, I found myself at a job at Shopify. I don't know how that happened. This is before people really knew what Shopify was too. I remember people were like, what is this company you're joining? Who are they? Why are you working from home? Is it a pyramid scheme? Nobody believed anything. But joined Shopify really early on, joined in the support org, just wanted to get foot in the door. And that's where I met Zach. So I've known Zach for almost 10 years now. We both met at the trenches of Shopify. I remember we met at an offsite actually, and a mutual friend connected us, and that was kind of the end of it. We've been best friends kind of ever since for 10 years now. And so was at Shopify, I was in support for a little while. I was on a marketing team that got to travel all over Canada and the US. Everyone thinks that's so glorious, but after you do that for a month or 2 or 3 months, it gets quite tedious. And then I joined the sales team and I always said I never wanted to do sales because in university I had a sales job for one of our carriers here called Rogers, and it was the worst job on the planet. And I said, I'm never getting into sales ever again. And of course, my guru at Shopify, his name is Jamie. He was like, no, you should try this. You should do this. So I did, fell in love with sales, closed some of Shopify's biggest deals on the retail side back in the day, and spent about 3 years there. I met my partner there, who's— she's been at Shopify for 9 years. So all we talk about in our house is Shopify and e-commerce. And then I was a director for a public company in the payments space after that for a year and a half. And then Zach and I, we found ourselves together at another company building mobile apps. In the Shopify ecosystem. We learned things to do, things not to do. And then one year ago, so September 2023, we decided to found Reactiv. And our goal was to take all the problems, everything we've learned in 10 years, dilute it down, think of where the market is going, and put everything into it. And we've risked everything for it. People called us crazy, but here we are.

Oh my gosh. I love— well, just like a few callouts. I think it's so interesting how people sort of, I don't know, maybe it's concern that they expressed when you were initially thinking about joining Shopify and now like think about where it is today. And also, I mean, I love the fact that you were sort of hesitant to, or not hesitant to join sales, but, you know, like uncertain of whether or not that would be your path because now knowing you, Ross, it sort of feels so natural to you and you're such a, just a natural storyteller. So, I think it's awesome that, you know, you were able to find your way there.

Thank you. Yeah, it doesn't even feel real some days. It's kind of all culminated to React Native.

No, that's amazing. And I think you actually teed me up perfectly because where I wanted to sort of shift a little bit more was towards the product and a little bit more towards the market. And I think, you know, you mentioned the 2010 era in your sort of introduction. You know, when I, when I think about e-commerce booms, I think to the COVID era, you know, more, a little bit more recently. And, you know, this incredible shift that brands made to sort of embracing e-com mostly because that's where their consumers really wanted to, to find them, you know, like myself. And I think, you know, with that type of saturation, understandably, you know, we saw this sort of surge in customer acquisition costs from, from brand, the brand side. And I think that was sort of this constant complaint, right? That this frustration And that, you know, how are brands sort of expected to compete when the costs are just so high? Yeah. And so, and that's sort of what I think was so exciting about the Reactiv opportunity to me. And so, I think it'd be great to sort of unpack a little bit more about how you thought about Reactiv in meeting this moment, and sort of why build within the mobile app platform space, broadly speaking.

Yeah, I mean, I hope, you know, fingers crossed and knock on wood, we've done a lot of research, but I truly believe mobile apps are going to be the future. And I know when I joined Shopify, it was kind of the same thing. I said, everyone's going to start shopping online. Like I thought retail, you know, and that has been the case to a certain degree. I think e-commerce has definitely spiked, but I think I see the same pattern with mobile apps. And this is a crazy fact, and a lot of people don't know this, but in 2022, Apple released a state of affairs for the App Store. And in that, they broke down all of the sales from all of the apps inside of the App Store. And this is just for Apple. And in 2022, take it— I don't know, take a guess, Mira. How many millions or billions or trillions do you think Apple's apps processed in 2022?

Oh my gosh. I don't even know. I mean, for percentage-wise, I don't even know.

You're like, this is being saved in history.

I know. I'm like, this is going to be cemented. No. I mean, from a percentage perspective, oh gosh. I mean, at least like 60, I don't know, high 60s, 70s.

Okay, so it's crazy and no one knows this, right? And it's on the web. You can go and find it. So in 2022, the apps processed over $1.1 trillion in GMV. It's a lot of money.

Ross is right. That is a massive amount of money. Now, I want to try and help you all visualize and contextualize How much money that is in terms of the federal government. The US government borrowed $1.1 trillion in just the first 6 months of fiscal year 2024. Interest payments on the US national debt crossed the $1 trillion mark in 2023. Nvidia, one of the world's most valuable companies, has a market capitalization of about $1.1 trillion. If you were to spend $1 million every day, It would take you about 3,014 years to spend $1.1 trillion. So if $1.1 trillion were in $100 bills, it would weigh— this is a real stat, everyone— it would weigh approximately 11,000 tons. Stacked, this one's even crazier. This one's easier to kind of conceptualize. Stacked, these bills would reach about 689 miles high. Let's figure out how long 689 miles is. So let's do this. Okay, so 689 miles. Boston to Washington, D.C. is approximately 440 miles. 689 miles is about a 1.5 times that distance. Boston to Miami, roughly 1,250 miles. Therefore, 689 miles is about halfway to Miami from Boston. And for all of you runners out there, a marathon is about 26.2 miles long, right? Therefore, 689 miles is equivalent to running approximately 26 marathons back to back. If you were to walk at a pace of 3 miles per hour for 8 hours a day, it would take you about 29 days to walk 689 miles without any rest days. Hope you enjoyed that little, uh, divergent there. We're gonna do an ad and then we'll be right back.

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if you look at that number, it actually goes up 30% year over year, and, and no one really talks about it, right? People are mostly focused on the web. Um, and then if you break that down further and you remove things like flight tickets because of the crazy people, and you remove things like games, and you remove all sorts of other stuff, and you just focus on commerce— so people buying things, CPG products or things they want for their home— It's the lion's share. It's over $600 billion in revenue. And again, it keeps growing 30% year over year. So our focus with Reactiv is really to be where customers want to be in the future. And I think when we look at the new customers to the new shoppers, we look at Gen Z, they want to shop on their phone. They do everything on their phone. It's crazy when I, when I tell people the story about Reactiv and what we're building and I talk to people our age, you know, at a bar or, you know, a party, People are like, what do you do? And I kind of explain it with Amazon in mind. And then when I talk to my nephews who are like 10 and 12 years old, they're like, oh yeah, shopping apps, like coolest thing ever. Like, which apps can I shop in these apps? And that's the future that we're going to. And we want Reactiv to be the company powering it. So whether you're a small SMB who's just getting started and you want to focus on getting a customer and you want them to shop over and over again, Or you're, you know, a massive brand like Nike or Lululemon or Zara one day. And then instead of spending millions of dollars to manage your own team to manage an app, you can use a platform like Reactiv. You get 90% of what you want, and then you use our SDK to build the final 10% on top of it. It's pretty cool. So we're, you know, we're kind of breaking all the rules. We're boiling the ocean. We're going after small, mid, large. But for some reason it's working. So we're pretty excited about that.

No, I love it. I think that's like actually part of the magic here is it has such broad appeal across sort of different size, you know, brands and customers. So I think, yeah, it's no surprise, I think, to me that it's sort of catching fire here. And I guess speaking of catching fire, I know that you're sort of coming off of a very big announcement and the company seed fundraise, the product launch. I mean, I'm not I'm not even going to let myself speak to this, but I would love to hear, and I'm sure listeners would love to hear sort of, you know, the specifics and sort of what you're hoping to accomplish with this funding.

Yeah, we're super excited. So one year, we're going on one year now and we've managed to close a pre-seed and we closed a seed as well in this, in this awful market somehow. We've been pretty lucky. Again, we broke all the rules. I would not recommend, you know, our playbook to anyone, but we're coming off of a big seed round that we just closed. in July. I think I'm allowed to say, so Bonfire Ventures led the round. We got Fox Capital, Dahir Capital, we've got the lovely folks at Alumni as well, part of our big seed round. And our focus here, so we think of Reactiv and our future in horizons. And the first horizon for the company was really the first year. So building a team, an amazing team, building an incredible product. So, and I know when we talk about Reactiv, people are like, what is this? It's just mobile apps. But it's actually a dashboard where a merchant, a business owner can go in and they can customize their app. They can make it look and feel however they'd like. And something we learned about being in the app ecosystem for a long time is people actually hate to do that. They hate to manage multiple CMS solutions, right? So you're managing how your web looks. Now you're managing how your app looks. You're managing social media. You've got all these channels. And you want it to look and feel the same. So if a customer is coming to any one of your channels, they get the best possible experience. So then we built an AI tool that'll actually build the app for you and it'll update your app based on your website. And that was a lot of work. And then we built these incredible, super performative mobile apps that people love to use and they're fully accessible. So if, you know, you have a customer who's using an extra large font or someone who can't actually see their screen, We support, you know, a reader and things that'll read to you. That's fully accessible. We're actually the only company on the market that's doing that with mobile apps. We think that's super important as well. So you've got your app, you've got your dashboard, you've got your data, your reporting, you've got push notifications, you have AI that powers your push notifications. So our first chapter, our first horizon was around building that product and then finding about 10 to 15 customers that wanted to use that off the get-go. And so we launched earlier this year with about 15 customers in private beta, and we went from 0 to over $100 grand in ARR, even higher, almost in like a day. And everyone was like, wow, that's amazing. But what was really cool was when we looked at the data, all the hypotheses were true. So AOV was up about 30%, conversion was up. If a customer purchased in the app for the first time, they were twice as likely to repurchase than if a customer went to the web for the first time. we were seeing all the metrics as a business, but our merchants were also seeing all the metrics, which is just as important, if not more important, than our metrics. So we started to do a lot of that proof points. We had a lot of assumptions and we got a lot of feedback from our first customers. So we iterated on a lot of those feedbacks. And one of the biggest things in this ecosystem, so if you're thinking about building an app today, you'll know that you can go and use a cookie-cutter platform and you're kind of confined to what that platform allows you to do. Or you go with an agency and you spend millions of dollars and you get, you know, the world is your oyster, do what you'd like.

Right.

Reactiv bridges those 2. So we give you a platform to do about 90% of what you want, and then you can actually partner with an agency that is allowed to use our SDK and build on top of the app. So we actually have 3 massive agencies in the Shopify ecosystem building mobile apps for customers for the first time ever. So we're kind of doing it on the merchant side, the partner side. We're really trying it all. And everything seems to be working. So our next focus now with all this funding is to continue to grow the team. So we've got about 30 people on the team, which is probably insane, but we're probably going to grow that team. We're going to add more engineers to the team so we can build faster, we can integrate quicker, we can push new features, we can push the things that customers need and want very quickly. And we're going to build out a sales team, of course. Right. So time to— yeah, time to go after the market, time to share the word of Reactiv. We're building out a marketing team. But our focus here is to double down on this product-market fit. It's to show that there's scale behind this and we plan to do it in a record-breaking time, about a year, and we plan to raise Series A a year from now as well. So yeah, it's been crazy.

Crazy. I know. And I think something that I was really struck by was just like the price point sort of that's required to even secure an agency, right? Like that already sort of excludes so much of the market. Just it's so cost prohibitive, right, at that point. And so I think Reactiv is really sort of offering not only a better solution, in my mind, but also to a segment of the population that was just underserved, candidly. Like, just really had no sort of way of sort of building these capabilities and reaching their target market otherwise. So I think that's so exciting, Ross. I mean, we're thrilled to be a part of the journey. And I think something I wanted to sort of close out with a little bit was just the best way for our audience to engage with you and the Reactiv team. And I guess, who are you hoping to connect with? As you, again, add fuel to the fire with this round?

Yeah. So I think the biggest thing for this round is to get in front of more merchants, in front of more businesses to show them what we can do. I think when, when people think about a mobile app, you know, if we ask most business owners, hey, would you have— would you like to have a mobile app? They always say yes. But there's a but. And the but is, you know, what, what is the percentage gain I can expect? You know, what is the strategy that I need to have? How much time is this going to cost me? for a lot of businesses that even do decide to build a mobile app, they don't have that app strategy in mind when they decide to do it. So an example of this is, you know, we'll work with a large business, they'll launch a mobile app, but they never had a strategy behind it. So they don't have a budget. So now no one's creating content, no one's sending notifications, and it, it kind of remains stagnant. But in the best possible cases, we see merchants absolutely crushing it, like numbers that you won't even believe are true. And so our big focus now is to get in front of as many merchants as possible. but to also help them with the app strategy. That's kind of React Native's job too. Mm-hmm. So we provide the software, but we want to help you with the strategy behind the scenes. And we've worked with apps for a long time now. We know what works, we know what doesn't work. We're actually taking all the data from our apps and we're using AI to kind of figure out what's working with customers, what's not. And we're doing it hyper-segmented. You know, we're segmenting down to the individual user. So if we notice your profile, Mira, is similar to someone else's, We'll try and run the same campaign for you automatically, you know, taking out someone having to go in there and do it all for you. But our big focus is on getting those merchants talking about app strategy, getting them bought into that strategy from the beginning, and then showing them the value one month in with their app. It's, it's cool. It's really fun to change people's opinions as well.

Also, like one month in, that's like, you know, just like unknowing again on like across the enterprise sort of spectrum and what feedback loops look like. Just seeing that ROI, you know, 30 days in, And it's just so powerful for a brand that, to your point, is keeping such a relatively lean budget and wants to ensure that each incremental dollar is spent in the right way. I think that's incredibly powerful.

Yeah. We have this— it's been really cool to do within a month because we have this superpower with App Clips. And most people— I don't know. I think most people, when we talk about it, we say, what are App Clips? No one knows what we're talking about. But an App Clip— allows you to open and run a mobile app without ever installing. So if you're on Instagram, you're on social media, you get a message from your partner. Today, if you click on it, it usually goes to a landing page where you can kind of see the product from the ad. But with Reactiv, when you click on that ad today, it'll actually open the app for you automatically without you ever having to install it. It's really cool. And when you go into the app, you get the best version. You get The highest quality content. It's buttery smooth. There's no pop-ups. There's no ads. It just works every time. And as a business, you get the data. You get to see what your customers are looking at, and you get to send them notifications. It's kind of this this win-win, and it really allows us to compare apples to apples because I think for a lot of people too, when you think about app data, of course the app data is going to be better because the most loyal, your best customers are going to install your app. But with app clips now, we kind of get to compare apples and apples because it's not up to the customer anymore. It opens directly in the app. So we compare a customer going directly to the web landing page and someone going directly to the app landing page. And the data is just incredible. So we're excited this holiday season to launch with a ton of merchants and see what that data is. And then we'll make changes and push those changes in the new year.

Amazing. Ross, thank you so much for joining us. This has been such a treat for me and also for our audience. So thank you so much. And I really appreciate the time.

Thanks for having us,

Mira.

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