Interview With John Hsu, Co-Founder of SurfMerchants LLC

Mystery Shopper Magazine is pleased to present the first in a series of interviews with mystery shopping web developers, SurfMerchants LLC. They are the creators of, among many other products, SASSIE, GeoVerify, Presto Insta-Shops and PrestoMap.

Note to Readers: This started out as a (yawn) interview with the founders of SASSIE, however as we read their website [], researched the company and corresponded with the owners, we became intrigued with the incredible company they have created. This is a company, which has decisively emerged as a major mystery shopping web developer, and also one which is forward-focused, client-driven and—most importantly—a company which clearly places great value on their employees.

Overview: Tony Felos, John Hsu and Greg Ansin founded SurfMerchants in 1998. (Greg Ansin has since left the partnership to launch a successful career as a videographer, editor and producer of horror films, as well as several documentary films.)

Tony and John have collaborated since 1989. John has been quoted as saying, “People ask, ‘How do you guys stay together after all of these years’?” He responds, “Find someone who is good at what you suck at and who sucks at what you’re good at, and you’ll be amazed at how long you stay together.”

MSM talks with John Hsu, Co-founder and Managing Partner:

MSM: In 1989, Tony had graduated from college with a BS in Music Production and Engineering and you had dropped out of six years of medical school. Together, you formed Prophet Media Group, which humbly began as one recording studio in Tony’s garage. Eight years later, Prophet Media Group was mastering CDs, doing graphic design and had expanded to three recording studios. You were living the good life, hanging out with legendary Boston rock bands, such as The Cars, J. Giels Band, Boston and ‘Til Tuesday. You were talking franchise! Then, suddenly, you closed the doors and dissolved the company. What happened and what did you learn from this experience?

John: It was actually four years into Boston University’s six-year med program (I did two years undergrad and two of the four years of med school.)

We learned several things:

* Don’t get cocky – anyone can get lucky once. Every industry changes eventually, and that’s when you find out who’s got the real smarts to make bold adjustments and survive into the next era. With the music business, we definitely DIDN’T have the smarts. Computers made it possible to record entire albums in your bedroom, so that hurt our recording studios; and the Internet made physical CDs obsolete, so that wrecked our CD manufacturing business. We made small moves to accommodate those changes and patted ourselves on the back for our “vision”, but they were far too little and far too late and we got our butts kicked in record time.

With SurfMerchants, we’re always on the lookout for threats, and make moves years before we have to, to ensure our longevity. Our entire Presto Mobile platform is a gigantic bet that a substantial percentage of the mystery shopping industry is going to look very, very different three to five years from now and we want our company, our mystery shopping companies and the shoppers on our platform to be ready for that.

* Business owners have immense responsibility. When Prophet Media Group went under, we put dozens of people out of work. These were people who believed in our company and believed in us and turned down other opportunities (often higher paying) because of that. It was incredibly painful to let those folks down.

Today at SurfMerchants, the stakes are even higher, because our staff is older than Prophet Media’s was – now entire families are dependent on our continued success. It’s no coincidence that in 16 years, we’ve never laid off an employee (not even during the recession when advisers were telling us it was the smart thing to do) – we just never want to repeat what happened with Prophet.

MSM: In 1998, you and Tony and Greg Ansin, who had joined you at Prophet Media Group, dusted yourselves off and launched into a completely different kind of business venture, SurfMerchants. Since none of you had a background or experience in web development, why did you consider this a viable option?

John: Frankly, because if you’re clueless enough, everything looks easy! If we had been just a LITTLE more knowledgeable about the web development industry, we surely would have stayed out of it altogether!

What we DID know is how to do is work like crazy, learn on the run, recognize business opportunities when they came along and attract the right kind of people to be employees and partners.

We knew nothing about the mystery shopping industry, until Tom Mills from HSBrands brought us in to build the first version of SASSIE. We knew nothing about shoppers or scheduling, until Lorri Kern from KSS took the time to walk us through how a scheduling system SHOULD work. There was no logical reason either of them would choose us other than we were good listeners, fun to work with and really dedicated to making something that would help them.

In fact, the only qualification that we actually DID have in web development was one we didn’t even realize we had. We were pretty fluent in Access databases because I had built a fantasy football system in Microsoft Access, when I worked in tech support at the gigantic accounting firm of Ernst & Young. (Yeah, I probably should have been doing something that was actually accounting-related.) It turns out that Access is extremely SQL database-oriented, so I actually found out I knew SQL from goofing around with football stats!

Incidentally, for all of our success in the mystery shopping industry, we often wonder what would have happened if we had just pursued fantasy football instead. In the 90’s, fantasy football was a small thing, but now it’s a $70 BILLION dollar industry!

MSM: A quote from your website: “So there we are in the conference room: owners, senior managers, our best and brightest … and the F.N.K. (F****in New Kid) basically says we’re all damn idiots and need to get into the 21st century. His idea transforms our business in two months and that F.N.K. is now the B.M.O.C.”

Surely, his assessment of your company was not, initially, warmly received! What was his game-changing idea and how did it transform your business?

John: Actually, it was VERY enthusiastically received – it’s amazing how much of the crappy office politics magically goes away when you hire smart, nice, focused, reasonable people!

We were trying to figure out how to overhaul SASSIE’s reporting system, which was definitely looking dated and lacked the flexibility to meet the client demand. Our F.N.K. said “Sooo … why aren’t we just building a brand new system all based in CSS? We could even let the mystery shopping companies build different reports for every client. Haven’t you seen the CSS Zen Garden website?”

Cascading Style Sheets is a technology that lets you instantly throw a new skin (or “theme”) around the “skeleton” of a web page. The CSS Zen Garden website showed what designers around the world could do with the same skeleton using CSS.

CSS had been around for years, but we were able to use it in mystery shopping to create our “SASSIE Chameleon” reporting system. It enabled clients to have their reports instantly customized, simply by dragging and dropping elements on a page and selecting a pre-built theme or creating their own theme. It instantly transformed client perception of SASSIE Reporting to something beautiful, dynamic and a pleasure to use. It’s a shame that shoppers don’t get to see that side of SASSIE.

MSM: The SurfMerchants’ formula for success appears to be: “Be the best, now and in the future; create a company of people who share our values and who are willing to work extremely hard; attract and retain highly talented individuals by offering unparalleled benefits []; and, most importantly, have lots of fun in the process.”

With a 96% employee retention rate and a steady stream of cutting edge products, this strategy is clearly effective. Your website uses “Work smart; Play stupid!” to describe the work environment, which includes “Beer O’Clock”, (which begins at four o’clock on Fridays, when the kegerator is rolled out), “the Ball Pit and the, er, toilet bowl”. With critical deadlines constantly looming, doesn’t that make it tempting sometimes to reschedule the “fun” for later? If not, why?

John: Once again, if you hire the right people who innately care about customers and each other and take pride in their work, you can trust them to do the right thing. Case in point: Last fall, DURING Beer O’Clock, we got a call about an urgently needed project for the national elections. When that news came in, we didn’t even need to ask—the people we needed were instantly on the task. Also, (I probably SHOULDN’T say this part) it helps that our staff are able to produce quality work even after an hour of Beer O’Clocking!

MSM: SurfMerchants commissioned a study on the mystery shopping industry by Beacon Point Consulting. The results indicated a high likelihood that the industry would consolidate over the next five years, with the more successful mystery shopping companies buying less successful companies or simply driving them out of existence. When was this study conducted and how did it alter the focus of SurfMerchants?

John: This was around 2003, if I recall correctly. Strategically, we had really narrowed our focus to making our mystery shopping companies more successful, INSTEAD of trying to sign up every MSC that wanted to be on SASSIE. If the industry is going to consolidate, you want to make sure you’re growing sharks, not collecting guppies.

We typically get two to four MSCs, every WEEK, interested in getting on SASSIE—and we turn away nearly all of them. The few we do add on are usually in geographic areas or business sectors that don’t overlap with our current clients. We’d rather have 150 MSCs, each doing 10,000 shops a month than have 10,000 MSCs each doing 150 shops a month.

MSM: A small sampling of shoppers on Mystery Shop Forum offered a critique of SASSIE. They all agreed they liked the job search function, report and pay status features, the ease of entering reports and the PDF option to save reports. Their criticisms centered on the fact that photos have to be uploaded one-at-a-time, the entire report cannot be viewed while information is being entered and there is no “reschedule shop” option. What are the chances that any of those will change in the foreseeable future and are any upgrades on the drawing board?

John: The photo upload issue is hard to accommodate because we have to make sure the right picture is associated with the right question. This is especially critical because our “Photo DNA” anti-fraud feature helps MSCs pay especially close attention to photos for one question that are identical or suspiciously similar.

Adding a “reschedule shop” feature wouldn’t be too difficult, but it’s not something that schedulers tend to be crazy about. We’d definitely consider adding it if schedulers would get on board with it. Within certain parameters, I could see how it could save schedulers some work and give shoppers more flexibility to get shops done.

I’m not clear on the “view entire report” issue. Unless the survey is specifically structured to work across multiple pages or has dynamic “hide/show” questions set up, MSCs can set this kind of form behavior, using our “RuleZ” feature, and shoppers should be able to see the entire survey.

MSM: GeoVerify was introduced for the purpose of enabling shoppers to prove their location and time, while performing mystery shops on the SASSIE mystery shopping platform. It was rumored that all MSCs using the Sassie platform, would soon require a GeoVerify code.

Initially, many members of the Mystery Shop Forum met this innovation with some resistance. Some viewed it as invasive, while some pointed out its often-inaccurate readings. Over time though, shoppers have discovered how GeoVerify can benefit them, especially when they have to produce a proof of visit, for example, when they did not receive a receipt or when the business was closed. Since there are still reports of inaccurate readings, what causes this erroneous location reporting? More importantly, is a “fix” for this issue in the works?

John: We’re definitely sensitive to shopper privacy issues – in an age where more and more of our lives are being uploaded into the Wild, Wild Internet, you’d be silly to not be concerned. We’re also aware that all mystery shopping platforms live and die by the level of trust shoppers have in that platform, so it’s always something we consider with every feature we build.

For that reason, we built GeoVerify in a way that puts shoppers in complete control. It only tracks your location when YOU tell it to. MSCs only know the GeoVerify events that YOU choose to submit. GeoVerify is only intended to VERIFY the data that you’re already sharing, not expose ADDITIONAL data.

Also, to my knowledge, no MSCs REQUIRE GeoVerify to do their shops. It’s simply a way for shoppers to build up more credibility over time. In an industry where some flat-out criminals have made thousands of dollars on fake shops, fraud negatively impacts all of us because it reduces the demand for mystery shopping services overall.

In regards to the inaccuracies, it’s always a challenge to get GPS on mobile devices to work reliably in all situations. The part of the country you’re in, the size and composition of the building you’re in, your cell phone signal strength, the quality of your mobile device’s components – all of these can result in slow or poor location detection.

We did put out an update to GeoVerify a few months ago that should have significantly reduced the number of times GeoVerify would totally give up and not give you a GeoVerify code. What’s not commonly known is that cell phones try several methods to determine your location (cell phone tower triangulation, WiFi connections, standard GPS and IP address) and we made several adjustments to GeoVerify to take better advantage of that information.

MSM: Presto Insta-Shops are a hot topic on the Mystery Shop Forum. They have gained instant popularity, due to ease of performing and reporting shops, the reasonable fees and reimbursement offered and the lightning-fast pay.

From what we’ve read, Presto Insta-Shops are still in the beta testing stage. Since Presto-Metrics, Inc. makes the shoppers’ payments, we are wondering if SurfMerchants is simply paying shoppers to beta test Presto Insta-Shops or if there’s an MSC or manufacturer also involved?

John: We’re astounded and very grateful for the enthusiastic reception to Presto Insta-Shops from the shopper community. It’s always a scary thing to introduce a new concept, but it’s great that shoppers, MSCs and clients are totally getting it! Usually there’s a long “explanation” period for these things, but when it becomes immediately obvious to your potential users, you start thinking that you’re really onto something!

To answer your questions:

PrestoMetrics is a separate company, which we formed to manage its business independently of SurfMerchants’ products, but it’s still us!

We’re out of the beta stage at this point, but you’re very perceptive to suspect that some shops were internally funded! The “1,000 Cups of Coffee” (and the current “500 Cups of Coffee”) projects are ours, and all of the rest are for real clients.

There’s a term in software development called “eating your own dog food”, which essentially means, “force your own people to use your new product, so that the stupid stuff gets fixed ASAP”. The coffee shop projects were our way of eating our own dog food – luckily, it was tastier than we had any right to hope for! We had hoped to fill the 1,000 coffee shops in two weeks – we actually filled 1,000 shops in two and a half days, signed up 3,600 new shoppers and only melted down two servers in the process!

Some background on Presto Insta-Shops:

Everyone knows that mobile is a growing force in mystery shopping, but we were really careful to not fall into the trap of, “Just Mobilize What You Got Now.” We saw other companies invest a lot of effort into developing and maintaining a mobile platform for the same old mystery shops, only to find that it didn’t get widely used.

The truth is that mobile adds pathetically little value to the vast majority of STANDARD mystery shops. The instantaneous “on the spot” potential of mobile technology doesn’t help if the shops still take time to find, to apply for and be assigned, if the surveys are long and require narratives (everyone above the age of 12 hates typing on mobile devices) and if it takes weeks or months to get paid.

So with Presto, we didn’t just set out to change the technology, we set out to change the entire nature of mystery shops. While there will always be demand for standard mystery shops, there’s also a huge, unfulfilled demand for something faster, easier and cheaper, something where mobile really DOES add substantial value.

Sometimes the client doesn’t need a few long, detailed shops – they’d rather instantaneously get dozens of short, focused shops. Presto Insta-Shops gave us the opportunity to create a really different shopper experience with mobile technology.

Our vision with Presto: Anyone can pull out their phone whenever (and wherever) they feel like doing shops, create a Presto account in less than 30 seconds, instantly claim nearby shops from a map, knock out a few quick surveys right on the spot and get paid incredibly fast.

For that to work, everything about Presto Insta-Shops had to be faster, easier and simpler for everyone involved: Instant program creation, instant shopper sign-up, instant self-assign, instant surveys, instant review and payment within days (never weeks).

The last piece was the trickiest – to guarantee that shoppers got paid quickly on all Presto shops, we had to take over shopper payment. Clients have to approve shops within a certain number of days or else the shops get auto-approved. And as soon as shops get approved, we pay the shopper.

We thought there would be some resistance to this from MSCs, but we found out that many of them were happy to hand over the work of paying shoppers.

But wait … that’s not all! We added SASSIE shops to to make it easier for shoppers to make routes of mobile Presto shops with standard SASSIE shops … and hopefully, everyone will ignore our secret evil plot to trick SASSIE shoppers into taking Presto shops and hornswoggle Presto shoppers into taking SASSIE shops.

Extra bonus: ALL of the shops on are currently available. Once a shop gets assigned, it immediately disappears from the map.

MSM: As with anything new, there are a couple little thingies shoppers have voiced concerns about. Most notably, that there is not a downloadable app, making access difficult. Also, once a shop is submitted, there is no means of viewing it to check on its status.

One shopper reported having a shop 7/8 done—all except for the tasting of the product—and when she logged into the next shop, the first shop disappeared. Since she thought she had 24 hours to complete the first assignment, she was quite surprised to no longer have access to it. She was also concerned about the consequences of not completing the first shop, if any.

Are these issues currently being addressed and what is the target date for full release?

John: Shops in progress should be easily re-accessible, so that shopper’s frustrating experience definitely wasn’t intentional; and yes, there should have been 24 hours to complete that shop. We’d definitely want to hear any reports about those kinds of bugs.

We definitely understand the apprehension of submitting a shop that you spent money on and wondering if it vanished into the ether, until you get payment on it a few days later.

For that reason, we’re actually putting the final touches on a Presto Shopper Log, as we speak, so shoppers will be able to access their history in the near future. We didn’t expect to get so many programs, so quickly, so we didn’t think there would be enough shops for anyone to even WANT a log yet!

In regards to having a downloadable native app, we’ve intentionally waited for two reasons:

1) It takes a certain level of time and commitment to download YET ANOTHER app and have it take up space on your screen and your memory. We wanted shoppers to be able to try Instashops instantly, right from their mobile browser. Once they decide they’re committed, THEN it becomes preferable to have an app.

2) It takes approximately two to ten times longer to develop and update mobile apps than it does to do the same in a “mobile web app” like Presto. We know from doing this for 16 years that we (like every developer on the planet) are pretty terrible at predicting the future and getting things right the first time.

Sticking to a mobile web app for the first few months has let us make rapid changes and improvements based on what shoppers are experiencing – we’re probably on our fourth or fifth major update already.

That said, we’re getting pretty confident that what we have currently is really close to a solid, reliable and easy-to-use user experience, so we expect to take all this and release a Presto Instashops app in the next four to eight months!

MSM: Mary, from JobSlinger, has knowledgeably responded to forum members’ questions about GeoVerify and Presto Insta-shops as well as PrestoMap. What is the association between the two companies?

John: SASSIE, JobSlinger, GeoVerify, Shop Notifier, DemoZilla, Presto Custom Satisfaction and Presto Insta-Shops are all our products. We may have different business structures to make sure the products can develop independently from one another, but at the end of the day, it’s all us.

Mystery Shopping is a fantastic challenge and huge opportunity for a web development company like ours. It’s an industry that wouldn’t exist in any substantial way without the Internet and it’s an endless puzzle to figure out how to build a system that more than three million people (shoppers, editors, schedulers, clients, etc.) can all be happy with. We’ve been doing it for 16 years and we’re as hooked as ever!

MSM: SurfMerchants is relatively small, with reportedly only about 35 employees. How is a company of this size, continuously able to conceive of and create all of these innovative products?

John: Tony and I would probably be disgustingly incompetent at running a company of hundreds of people. We like to know each and every employee as an individual and always be in touch with how each and every one of them is doing in their jobs. I hire every employee myself because I never want to work with anyone I can’t stand. That kind of personal connection just isn’t scalable.

For that reason, we set out from Day One to have a company of no more than 35 people. Once you get much bigger than that, you can’t avoid the dreaded middle management and all the crap that comes with it and that’s just not what we want our work lives to be like.

If/when Presto really takes off, we may have to treat that as a separate unit of up to 35 people, but until that day, we’re pretty much as big as we want to be. The great thing about software is that it can be incredibly scalable – a company of very few people can “put a dent in the universe”, to quote Steve Jobs. We’re just trying to put a few dents in the mystery shopping world!

MSM: John, we thank you for allowing us a glimpse inside the remarkable company that you and Tony built from the ashes of Prophet Media Group. We are confident the best is yet to come!

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