Select
Carlo Cisco, a 28-year-old founder with a track record of early investing success, identified a critical flaw in the daily deal model popularized by Groupon. While working at Groupon during its explosive growth phase in Japan—where the company scaled from 20 people to over 700 and $20 million in monthly revenue within months—Carlo witnessed firsthand how the business model fundamentally failed merchants. "Less than 20% of the customers ever return," he explains. "There are places that have literally shut down by doing a daily deal." This observation became the genesis for Select, which he started conceptualizing around 2013.
Carlo's strategy was two-fold: work with premier brands willing to offer ongoing, sustainable benefits (rather than one-time discounts) while positioning Select against luxury credit cards charging $100-$2,500 annually for benefits that were largely unusable points and perks customers never leveraged. By testing the concept with partners first, he validated that merchants would buy in if the program made economic sense for them and attracted the right repeat customers. The membership fee was set at $250 annually, positioned as an alternative to premium credit cards but with better, merchant-provided perks instead of points.
The company employed a strategic two-pronged customer acquisition approach. Early on, Carlo secured a B2B deal with a publicly traded real estate company offering memberships to building tenants—this provided critical volume and marketplace liquidity at a discounted rate but depressed the initial average revenue per user. Simultaneously, he built direct-to-consumer channels, gradually raising the direct membership price from $150 to $250 as the platform matured and proved its value. This blended approach allowed Select to build negotiation leverage with merchants while establishing initial traction.
By March 2016, Select had grown to just over 9,000 paying members generating approximately $700,000 in 2015 revenue. The company's unit economics were exceptionally strong: a blended cost per acquisition of just $154 against a lifetime value of $920, yielding a nearly 1:6 LTV:CAC ratio. Most impressively, the company achieved a 75% annual retention rate in its first year—far exceeding Carlo's initial expectation of 60-65% and placing the program in the top 20% of comparable membership programs. This suggested strong product-market fit despite the company's relative youth. Carlo initially expected his target market to be 25-35 year old urban professionals, but found the actual customer base ranged from 25-45 and included diverse industries beyond finance and entrepreneurship, including entertainment, media, and arts.
With a lean 13-person team and no dedicated marketing spend beyond Carlo's own efforts, Select was on track to nearly 4x revenue to $2.5-3 million in 2016. The company had raised just under $800,000 in seed and note rounds (including through the Entrepreneurs Roundtable Accelerator, which took 8% equity) and maintained a blended CPA of $154—well below the $250 annual membership fee, allowing for immediate profitability. While Carlo hadn't ruled out physical assets à la Soho House, he remained focused on scaling the merchant network and maximizing the value of the membership ecosystem.
- •Carlo identified a specific merchant pain point (customer non-retention in daily deal models) rather than chasing a trendy category, giving him a defensible problem to solve that competitors hadn't prioritized.
- •By positioning Select as a premium alternative to luxury credit cards with actual merchant-provided benefits instead of unused points, he tapped into an underserved segment willing to pay $250 annually for genuine value.
- •The blended acquisition strategy of securing B2B volume deals while simultaneously building direct-to-consumer channels created both immediate scale and the ability to raise prices as product-market fit became evident.
- •Exceptional unit economics (6:1 LTV:CAC ratio) and 75% retention rates in year one proved the core model worked, which enabled organic word-of-mouth growth without relying on paid marketing spend.
- •By validating merchant buy-in before scaling customer acquisition, Carlo ensured supply-side liquidity existed to support demand, preventing the chicken-and-egg problem that kills marketplace businesses.
- 1.Interview potential customers and merchants in your target space to identify a specific broken outcome or pain point that existing solutions don't address, rather than building a solution first.
- 2.Secure one anchor B2B customer or partnership deal early to generate volume and prove your unit economics work at scale, even if it means accepting a lower initial price.
- 3.Test your core value proposition with a small direct-to-consumer cohort before scaling, tracking retention and lifetime value to confirm product-market fit metrics meet or exceed industry benchmarks (aim for 70%+ annual retention).
- 4.Price your offering against the premium alternative customers currently use (in this case, luxury credit cards), not against cheaper competitors, and position the superiority of your actual benefits.
- 5.Rely on organic word-of-mouth by obsessing over retention and customer satisfaction rather than investing in paid marketing channels, and let strong unit economics and retention rates compound your growth.
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