SXSW shocker: For LevelUp, business strategy trumps buzz

AUSTIN, Texas--If the fastest way to a man's heart is through his stomach, perhaps the optimal way to engineer real affection for your startup is to cook up a similar approach.

That seems to be the logic behind mobile pay service LevelUp's presence at South by Southwest, a show where brands are drowning out startups in search of their breakout moment.

LevelUp, a 2-year-old mobile pay service operated by Boston startup SCVNGR, skipped dog-and-pony-show antics for a far more practical strategy that is drumming up dollars instead of buzz. The company is powering mobile pay at every food stand and kiosk inside the Austin Convention Center, making its scanners practically unavoidable to festival attendees in pursuit of mandatory coffees, grilled cheeses, and food items to correct for hangovers and hunger pangs.

LevelUp lets people pay with their smartphones after they've associated a credit card with the application. The company makes QR-coder scanners that plug in to most point-of-sale systems, and supplies the hardware to merchants free of charge. LevelUp partnered with the Austin Convention Center so that show attendees can download the application and use it to pay for their snacks, drinks, and food items throughout the entire festival.

The service is promoting its mobile pay option with large banners and table tents. If the messaging doesn't catch a person's eye, the appeal of saving a few bucks just might. LevelUp is offering all South by Southwest $5 off their first purchase.

The approach isn't one that's winning the company buzz, but it does seem to be converting attendees into actual users. With just 1 million registered users and a relatively unknown product, LevelUp needs every member it can get -- and it's added thousands in just five days here.

As of Monday evening, LevelUp has been downloaded 3,000 times by attendees, and more than 1,500 individuals have used it to complete around 3,000 transactions, founder and CEO Seth Priebatsch told CNET exclusively. LevelUp has transacted about $30,000 in total volume during the conference so far, he said.

Heather Leblond, attending the Interactive portion to bring back interesting digital strategies for her social media team at Paychex, said the LevelUp signs motivated her to download the application. She had not heard of the service before, but was intrigued enough to tell the rest of her team back home about her SXSW find.

Leblond's experience was shared by others I spoke to and people I observed in the convention center. But LevelUp didn't win over everyone. The company, along with others in the mobile pay space, still has a long way to go in convincing consumers that paying with a smartphone application is faster or more rewarding than swiping a credit card.

Two gentleman I spoke with paid no heed to LevelUp's promotions because they didn't see the point. Credit cards are widely acceptable, so no need to bother, they said.

The quirky payment option may not feel faster, but according to Priebatsch's data, it is. The average LevelUp transaction took nine seconds, compared to 15 seconds for credit and 18 seconds for cash, he said. And those who tried LevelUp once, were willing to give it a second chance. As of Monday night, 44 percent of the app's users here turned to LevelUp to pay more than once at the festival.

All of the early numbers seem to add up to this: by Sunday, the official end of the show, LevelUp will have accomplished what no other startup or application has managed to do in Austin: capture the attention -- and pocketbooks -- of the people of South by Southwest.