Coindrum – the Irish startup that makes every penny count
21 April 2015
Coindrum is a Dublin-based startup that can make life a little easier for harried airport travellers, as they struggle with baggage weight restrictions, currency exchange and departure gates that seem almost as far away as their destination.
“In a sentence, we provide machines in airports that passengers can use to convert their unwanted coins into duty-free retail vouchers, especially before they depart to different currency jurisdictions,” explained Coindrum CEO, Lukas Decker.
The young German wunderkind arrived in Dublin as part of his European Master’s Degree and came up with the idea for Coindrum while he was still attending business school. “I had the idea during my business degree and I wrote a business plan. I entered the Ireland Funds Business Plan Competition and I did well. I won the competition, which came with a cash prize, but more importantly one of the judges of the competition was Declan Ryan, the co-founder of Ryanair.
“He liked the concept, he liked me and a handshake later he became my angel investor. He is also a director of the company. I work out of his office now and he is very much involved in the day-to-day activities of the company.”
Decker stresses the importance of getting the right people on board at an early stage. “It was a bit of a grind, but I got support from the right people early on. Declan Ryan was great in terms of opening doors. The fact that I work out of his office now means I have full access to his team and the knowledge in the room. Also, I have another director Declan Fearon, who’s the owner and CEO of Tipperary Crystal.”
Decker had the option of completing his master’s degree in a host of top universities around Europe. Practical reasons meant he chose UCD, but he soon realised the benefits of Dublin as a location to set up an aviation-sector startup.
“There were practical reasons for initially getting me to Dublin, but the decision to stay here was a conscious one. I had a little early traction when I had graduated, but only because I happened to be here at the time.
“I evaluated Ireland, and more specifically Dublin, as a start-up hub and I really liked the result of what I was looking at. In terms of ease of business and the aviation sector, Ireland and Dublin as a brand do mean something. It’s very business friendly and it made a lot of sense for me, so I committed and decided to drop everything at home and move here.”
Solving the problem of unwanted coin
The problem that Coindrum is attempting to fix is twofold – one half on the consumer side and the other half on the side of the retailer. On the consumer side, inter-country travellers arrive at airports with, on average, €5.62 in unwanted coin. “People are currently stuck with their coins at airports. These coins are a nuisance during security checks and they end up mixing with other currencies. We all have a coin jar at home with twenty different currencies in it, never to be used again.”
On the business side, airports are struggling to increase footfall penetration. The percentage of travellers who stop and purchase products in the airport is the key success metric for any travel retailer. A small increase in the percentage point of people who purchase from an airport retailer will have a direct impact on the bottom line of the retailer.
The three main partners involved are Coindrum, the airport authority and the travel retailer. Commercially speaking, the airport authority and the travel retailer are usually interlinked. As well as a rent charged to the travel retailer to operate on the premises, most airport authorities also charge a royalty payment – a percentage of whatever the retailer turns over.
One of the important aspects of Coindrum’s success is that its system strengthens the commercial link between the airport authority and the retailer. Another advantage is that it streamlines the airport security process, by removing the metal from passenger’s pockets before they arrive at security checks.
Coindrum is attempting to support both the consumer and the retailer. From now on, travellers can arrive in Dublin Airport and empty all of the unwanted coins they are carrying into a Coindrum machine. The machine has a touch screen and the user interface is engineered to be as simple and as fast as possible. Consumers are required to touch the screen only twice.
Decker explained how the process works. “You chuck your coins in. You press the big red start button. The machine counts the coin. There’s a breakdown on the screen which lists the different coin denominations and shows how many of each coin you put in,” he explained. “The total sum is then displayed and it includes a 10 per cent extra free credit that Coindrum issues with every voucher.” From start to finish, this process takes place in a matter of seconds.
Coindrum has integrated its system with hardware and software from the market leader in coin processing technology, as well as an Irish provider of loyalty solutions. “The machines are PC based, which is important because it gives us a lot of programming flexibility. They can accept up to four currencies, three slave currencies and one master currency,” said Decker.
The slave currencies are exchanged into the master currency at an exchange rate that Coindrum can set and the voucher is then issued in the master currency.
Feasibility study and future plans
Decker describes an initial three month trial, at Dublin Airport, as a huge success. The trial was a success from both a commercial and technological perspective. Not a single technology hiccup was reported over the three-month period, with Coindrum recording a 100% uptime throughout the trial. Even more impressive than the technological success was how the system performed financially.
The system’s priority is to increase the percentage of people who spend money in the airport. Decker found during the trial that not only were the usage figures imperative, but how people then spent their vouchers is arguably of more importance.
“It turns out that, on average, people outspent their voucher value by a multiple of three. So there is an increase in revenue which is great from the retailer’s perspective. What we found was if someone collected a €5 voucher, they may end up going to a retailer and spending €20. That’s a sale that the retailer may not have made otherwise, which is fantastic. It’s also why they are happy to offer the 10 per cent extra per voucher.”
Decker believes the company is in a strong position due to its impressive trial results. It is now looking to increase its presence in Dublin Airport and is also on the lookout for staff. “I’m looking for support in terms of the manpower needed to scale the project. We’re going to take the trial results and we’ll be showing them off to the industry and airports around the world.
“The idea is simple, but it’s beautiful in its simplicity and we’ve proven that it works, both commercially and technically. Now it’s a matter of getting the right manpower on board and copy-and-pasting the Dublin success around the world.”
One unexpected aspect of the project has surprised Decker, which is the inventiveness of the Dublin public. “People just love the convenience of the service; because we give the extra 10 per cent free credit we have people bringing in their coins from home. We have people putting over €300 as a single transaction into our machines. They realise it’s the most convenient and economically lucrative way in the country to get rid of your coins. It’s something I didn’t anticipate but it’s happening, people are bringing in their coins from home – so great, I’ll take it.”http://www.engineersjournal.ie/2015/04/21/coindrum/http://www.engineersjournal.ie/wp-content/uploads/2015/04/Coindrum.jpghttp://www.engineersjournal.ie/wp-content/uploads/2015/04/Coindrum-300x300.jpgTechstartups,transport