Andrew Duffy wants to put more money into workers' pockets.
To do that, he co-founded SparkPlug, a startup that's developing software for brands and retailers to boost sales by giving their hourly employees a cut.
It's essentially a form of commission-based pay that workers can make off of hitting sales goals, whether across the board or targeted towards specific products.
Duffy, who is the chief executive, founded the company in 2020 with chief operating officer Jake Levin after working on the concept for a couple of years, first from Boulder, Colorado, until they eventually moved the company to San Francisco.
They also launched their own consumer brand — a tea company called Sky & Wyatt — in an attempt to learn first-hand what their own customers go through. But they quickly hit a road block when Covid-19 forced their retail partners to shut down in early 2020, and they subsequently sold off the brand's assets.
Now, Duffy and Levin are just focused on growing SparkPlug. They aren't particularly concerned about a looming recession, either, and see it as a potential tailwind for growth.
“Other than the past 12 months, our biggest period of growth was the thick of Covid," Duffy said. “When we see a scenario where some retailers are cutting their budgets and are changing their marketing strategies, or brands are saying, hey, we don’t have the dollars necessary to do these big spray-and-pray consumer marketing campaigns that are maybe working — great, they need to change the way they’re doing it and we’re one of the highest ROI, highest efficiency marketing channels that they’re ever going to use.”
On Thursday, the company announced an $8 million Series A round that was led by Lightbank and also included Industry Ventures, TenOneTen Ventures and angel investor Jason Calacanis. This brings their total funding to $11.5 million.
SparkPlug is also already profitable, Duffy told me, a milestone which the company reached before they even raised a seed round in early 2021.
"It’s been a journey of significant ups and downs that has been characterized by, many times, the inability to raise venture capital," Duffy said, because investors weren't interested in a tool for brick-and-mortar stores — even pre-Covid.
But that rejection from investors also forced the company to become incredibly resourceful and focused.
"We were in a position at that stage where we were like, look, we can’t spend a bunch of money on making this work. We have to have a tool that works and that makes money to exist," Duffy said.
Now that they've raised some additional capital, Duffy is focused on scaling the company efficiently while maintaining profitability.
The company currently works with small and mid-market brands, retailers and restaurants. Duffy wants to expand into more types of retail environments beyond beauty and food — such as pets, home improvement, consumer electronics and jewelry — and get what he calls "big logos operators" onboarded, as well.
But it's also about enabling other businesses to reward their workforces. At some businesses that integrate SparkPlug's tools, employees have seen their wages boosted by 10% to 12%, Duffy told me.
“We really want to change the narrative around what an hourly employee is. Today, people think of hourly employees as disposable, as a drag on your business, as a cost item on you P&L," Duffy said. "We want people to think of a point of sale employee, an hourly employee, as someone who’s really valuable and should be compensated as such.”
SparkPlug doesn't take a cut from workers' earnings. Instead, it charges brands customized subscriptions for access to its tools and analytics. The software is also free for retailers to integrate into their point of sale systems to run incentive programs sponsored by other brands. However, retailers can also run their own sales campaigns directly for $199/month.
The company has grown to 25 employees since it closed its seed round a little over a year ago. At that time, they had five employees.
