February 01, 2013
Solavei: Redefining Commerce for the Social Age
by Jeremy Gregg
- Founded: Sept. 21, 2012
- Headquarters: Bellevue, Wash.
- Founder: CEO Ryan Wuerch
- Products: Mobile phone service
Ryan Wuerch wants to make life better for millions of people.
“I am not looking to turn a few people into millionaires. I want to empower millions of people to become thousandaires,” he says. “And I believe that the way to do so is by making commerce less expensive and even profitable for everyone involved.”
Wuerch is Founder and CEO of Solavei, a company that is pioneering what he calls “social commerce.” In many ways, the concept is at the heart of the direct selling model—avoid spending billions of dollars on traditional advertising, and instead move it into the hands of the people who use the products.
“The growth of direct selling is one of the most significant trends hitting the global economy. I see one of the main challenges in the industry to be the reliance on products that could be seen as unnecessary or as a luxury. That can make repeat sales a challenge in some cases,” Wuerch says. To differentiate itself, Solavei is focusing on a service that customers are already using to connect themselves every day—mobile phones.
Mobilizing a Movement
“A recent study reported that most people would prefer to leave home without their wallet than without their cellphone. These devices have become a part of our DNA, an expression of who we are,” Wuerch says. He adds that there are more than 300 million cellphones in the United States today, and he projects that there will be more than 6 billion cellphones around the world very soon.
Of course, the telecom industry is also one of the most capital-intensive and hotly contested markets in the world. This can be a very tough environment for a startup to survive, particularly when the industry is dominated by a handful of extremely well-capitalized corporate giants.
For example, the top two wireless service providers—AT&T and Verizon—have a combined advertising budget of more than $5 billion per year. While that would intimidate many less experienced entrepreneurs, Wuerch believes this actually provides a tremendous advantage for his new company. He sees those advertising budgets as a billion dollars he doesn’t have to spend, since Solavei wants to invest its resources in what he calls the “best form of advertising—satisfied customers.”
“At Solavei, we empower our customers with low-cost alternatives for the services that they are already using and make it easy for them to share Solavei with others,” Wuerch says.
The approach seems to be working. Solavei launched on Sept. 21, 2012; within 90 days the company had more than 110,000 members in the United States sign up for $49 per month for unlimited voice, text and data mobile service.
“This year we will begin to expand globally. We will also expand our platform to carry multiple products and services in addition to mobile phones. We anticipate millions of new members joining.”
Aligning the Trends
Before launching Solavei, Wuerch had spent nearly two decades in the telecom and technology industries. After several successful exits from earlier ventures, he founded and built his last company, Motricity, into a firm with more than a billion-dollar market cap before he parted in 2011.
When he left Motricity, he told his wife Shawntel—the former 1996 Miss America winner who is now Solavei’s Head of Community Affairs—that he wanted to do something different with his next venture. He wanted to find a way to make a difference.
Wuerch went away for a few weeks to study the major trends that he saw shaping the future, and he landed on four that he saw as underpinning economic growth around the world.
- The worst economic conditions since the Great Depression, which was driving people to focus more and more on saving money. This also was leading to the creation of entirely new companies, such as Groupon, to capitalize on this drive.
- The rising dominance of social media within so many people’s lives, which was creating an explosion in the number of active relationships between people.
- The surge of mobile device usage, driving an incredible number of innovations in not only communication but commerce, banking and more.
- The continued growth of the direct selling industry despite the economic downturn. In particular, he was struck by the rapid rise of outside investments in new direct selling companies like Stella & Dot, Ambit and Ignite.
While studying these trends, he also perceived tremendous waste in the “shotgun approach” represented by the $500 billion spent each year on traditional advertising.
Solavei is a company leveraging the power of social media and direct selling to help people save money on their mobile service while avoiding the heavy advertising costs typical within the mobile industry.
As he studied these trends, he saw an opportunity to align them within a single company, leveraging the power of social media and direct selling to help people save money on their mobile service while avoiding the heavy advertising costs typical within the mobile industry.
“Solavei is positioned to positively impact people without changing their behavior or their environment,” Wuerch says. He explains that the company’s name is a combination of words meaning “sun in your veins,” a metaphor for the powerful opportunity that Solavei seeks to provide to its members.
Investors have put more than $20 million into Solavei so far, allowing it to attract a top-tier management team with experience at major corporations across the country, as well as a former U.S. congressman. Key positions are now held by former executives from T-Mobile as well as Wuerch’s last mobile services company, Motricity.
A New Approach to Compensation
Solavei’s initial service is a $49/month mobile plan that includes unlimited voice, data and text messages. The service is built on the backbone of T-Mobile’s infrastructure, providing customers with leading 4G services at a fraction of the cost of other providers.
Even if they are only interested in purchasing the cellphone service and have no intention to recruit others, all customers are eligible to become independent distributors (whom the company calls “members”). They receive a personalized URL on the Solavei.com website that they can easily share on their social networks, or they can even adapt a Solavei-themed WordPress template for their own Custom URL.
The goal is to make the Solavei service one of the easiest sales to make in the direct selling industry, explains Wuerch. He says that the average time for a new member to transfer their phone service, enroll in their social community and establish their banking relationship using the Solavei enrollment process is less than 6 minutes and 26 seconds.
In addition to removing as many barriers as possible for their members to close a deal, Solavei has developed a patented compensation plan based on social graph theory—primarily, by focusing on points of three within each person’s massive and growing network of social relationships. These focal points, or “trios,” serve as the essential building blocks for the Solavei direct sales program.
“We do not consider ourselves a multi-level marketing company,” says Jason Genthner, Head of Corporate Communications. “Our members are not paid on multi-levels as traditional MLM companies operate. We pay on who they bring in, who those people then bring in, and then on the entire network that they build.”
The primary way that members earn money is in $20/month increments for every trio that they successfully bring into the system. This allows them to essentially have free cellphone service with only a handful of successful recruits, explains Genthner.
Members can also earn “Fast Action Bonuses” for new recruits added within the first 60 days. These one-time bonuses are $50 for the first four trios (enough to pay the full cost of a brand-new smartphone). Additional payment structures include “Path Pay,” a monthly payment for those who have recruited at least four other trios (ranging from $50 up to $20,000 per month); members also earn a one-time payment of these same amounts when they enter a new Path, called a Path Bonus. The compensation plan is based on each phone in the plan, therefore, many members are building more than one business.
“We think a person’s voice is the most powerful form of marketing, so that’s what we want to invest in. While other companies spend billions on traditional marketing, we reward our members for sharing Solavei with their connections,” Genthner says.
But one of the most revolutionary aspects of Solavei has nothing to do with its mobile service offering or its compensation plan. Rather, it is with the method of its biweekly payments to members. Rather than sending them checks, Solavei pays its members through a Solavei card that was developed in partnership with Bank of America to work like a Visa debit card.
“Our vision is to create our own economy,” Wuerch says.
What makes this concept so revolutionary is that it allows Solavei to essentially control a significant portion of their members’ “mobile wallets.” Through incentives offered to members, these funds can then be directed toward purchases within the Solavei marketplace—allowing the company to pay its members for the everyday purchases of goods and services.
This is all in line with Wuerch’s goal to make commerce less expensive for consumers as well as more profitable for companies. This platform provides Solavei with an opportunity to harness the collective purchasing power of their members to attract deals from other vendors in a similar fashion to Costco. For example, Solavei members could receive a payment of the percentage of the money spent by members at a retailer such as Target.
“You make money through Solavei, you then save money through purchases in the Solavei marketplace and those purchases then also help you to make even more money,” explains Wuerch.
He also notes that many of these purchases are being made using a Solavei mobile phone and are then being shared using the company’s social technology. The end result is that Solavei becomes deeply embedded within its members’ social and economic lives, making it even easier for them to share the Solavei opportunity with others.
More Than Mobile Phones: The Future of Solavei
Mobile phones are merely the starting place for Solavei, Wuerch says.
“Mobile is the first of many, because it provides an immediate economic and communication conduit to our members. We anticipate that we will soon broaden Solavei from just mobile services to include energy, insurance, financial services… essentially, any of the primary items that you already have as a share of your wallet today.”
In other words, Wuerch never intends for Solavei to sell you anything. Rather, it will provide you with a better deal on the things that you are already buying consistently—and also provide you an opportunity to generate income.
“We will only consider goods and services that everyone uses and that Solavei can offer for less, generally by eliminating the costs of advertising. We started with mobile and created the social commerce system that would work with all goods and services. This is similar to Amazon starting out with books, but ultimately creating an online distribution system to offer many products. Future Solavei offerings must be the kind of services/products that can be easily shared in a social environment and must have an opportunity to create income for the members.”
In its first few months of operations, the company has already received endorsements from celebrities such as Stephen Baldwin—whose video testimonials about the product are already gaining significant exposure for the company on Facebook and other social media sites. Wuerch says that Solavei has never paid for such endorsements, which are being offered because of what these high-profile figures believe that Solavei can do for everyone.
When asked about the future of his company, Wuerch is optimistic: “We are building what we anticipate to be a multi-billion-dollar company. We have spent millions on branding to give people confidence in our brand, and we have built a strong patent-protected technology into a social commerce platform that is irrespective of geography and currency. Solavei is built for global scale.”