Fygone: the story of the failed start-up

By Max Kendix, and

For many students in Durham, it was a breath of fresh air. An innovative app that would apply student discounts automatically. We are used to presenting codes or cards, or asking for that 10% off advertised on the window, but Fygo had thought to make the whole process smoother.

It meant cheaper bills in Durham’s collection of independent businesses and restaurants, and in no time, students found their cashback racking up in-app. But as 2021 progressed, there was a feeling that it all seemed a little strange.

Fygo’s guerrilla marketing tactics meant people arrived at seemingly normal house parties and realised they were sponsored by the start-up, with paid-up student ‘ambassadors’ walking round signing party-goers up.

The ambassador team was huge, the business had offices in central London, and the cash-splashing was surreal: so-called #fygofridays saw the company put out a cash giveaway of £150, to be won by a lucky follower every week.

Throughout Michaelmas Term, what seemed to be teething issues kept popping up. Students were told the cashback was on hold for several businesses, but that they’d be back on tap soon.

And on 19th November, Fygo told all its users it was taking a break. It aimed, it said, to be “back up-and-running before the end of the academic year” while it got a “new rewards system in place”.

The company planned to redo their entire business model, and relaunch. But Palatinate has learned that staff were called up individually on a Friday in late January and told the company had ceased operations and they were out of a job.

The day this article was published in print, Fygo sent every user a text and notification that the app was to be decommissioned at midnight on 31st March, and all remaining balances would be transferred and cards unlinked. In a statement, Fygo said it had been “an absolute privilege” to support “Durham’s student community and its local businesses” over the last 12 months.

For those on the inside, the was not a surprise. We spoke to staff about what went wrong at the ambitious venture, and the real story before their failed attempt to re-launch. 

Fygo stickers like these could be found on shop windows across Durham
The business model

On the student side, it was simple. You signed up to the app for free (though many were offered a bonus for signing up a friend). You spent £10 at a business offering a 10% discount, and £1 would appear in your Fygo ‘wallet’, which you could withdraw from at any time.

The business end was, in theory, also straightforward. Fygo made a small commission on every purchase at the partner business.  Businesses would sign up in droves because Fygo directed spending students their way. By attracting more customers, both would win. 

In reality, this proved more difficult. Fygo was targeting small independent businesses in a tiny University town. Unlike big national brands, these stores could not always afford to lose money from commissions in exchange for long-term improvements in customer numbers.

The app itself was set up by a few budding student entrepreneurs, based in Durham and St. Andrews. They were very well-connected, and after receiving £400,000 in seed funding from Charles Wigoder, a telecoms tycoon, the energy of the start-up was truly underway.

In Easter and Michaelmas term 2021, it was hard to miss Fygo’s team of enthusiastic ambassadors on the streets in Durham. They could be found at stalls around student hotspots including pizza stalls outside the Bill Bryson and doughnut stalls outside colleges.

Painting Durham pink

No student could walk through Durham without being confronted by Fygo’s barrage of pink stickers, plastered across lampposts, bus stops, electricity boxes and the like. Ambassadors were given clear instructions to do so.

“Start painting Durham pink on Wednesday”, wrote one message, “remember 50 photos of each sticker or flier posted in your allocated guerrilla location for evidence”. One ambassador admitted: “We just went nuts”.

What ambassadors may not have known is that this marketing tactic is defined as flyposting – the posting of illegal advertisements on public property.

On their website, Durham County Council says, “Flyposting is an antisocial activity, which spoils the appearance of an area and, where it is displayed near roads, can cause public safety issues to both road users and pedestrians.”

This illegal activity could result in a fixed penalty notice of £100, an action or removal notice, or the matter could be taken to court. No action was taken against Fygo.

But when a major Durham society had its stickers posted by misbehaving students on Durham public property just months before, the group was called into a police station and threatened with a fine.

The marketing methods and work of staff drew some suspicion from students, and student ambassadors were told they must emphasise it was not a pyramid scheme to prospective Fygo customers.

Staff agreed it wasn’t, but as one high-up explained, “the idea itself wouldn’t be a multi-level marketing scheme. It’s like it’s not, but there are aspects of it that I can understand why a comparison was drawn.”

Expansion attempts

Fygo’s ambition from the outset was to use Durham as a launching pad: a national, maybe international, student discount company, was in their sights.

With excited investors pitching in to the young brand, they hired dozens of full-time staff to work in a kitted-out office near Bank in central London. Three cities were chosen, for their high density of students and bustling independent businesses: Oxford, Cambridge and Bristol.

By the end of summer term, Fygo had signed up over 3,500 students in Durham and expansion seemed inevitable. The summer break saw preparations for the Bristol launch put into place.

But internal staff frustration at the founders led to the entire sales team walking out in September. Departing staff over the autumn were never fully replaced and dwindling numbers stalled progress.

One ex-staff member said the departure of staff was never addressed in the office. “Anyone who left was not spoken about […] overnight it felt like the entire sales team just dropped off the calls and it was never addressed why”.

“Anyone who left was not spoken about […] overnight it felt like the entire sales team just dropped off the calls and it was never addressed why”

ex-employee

Fygo pressed on, and in a press release on 29th September announced it was launching in Bristol “in a BIG way”. Echoing Durham tactics, the company said it had “partnered with all of the main businesses in Bristol”, and were “enhancing the student experience by setting up lots of parties, events and competition giveaways”.

The company contacted all the main teams and societies to get them on board. On its website, Fygo boasted it was “there’ll be a ton of cash rewards available for students in October”. But after the sales team walked, the plans were quickly shelved, and Fygo never saw a successful launch beyond Durham.

Staff who had spent weeks preparing for the big Bristol breakthrough were left feeling hopeless, and it never succeeded in making a mark on the city.

Even before Bristol, ex-staff say Fygo “had initially planned to go to Oxford and Cambridge so months’ worth of work had been done [and] then it all shifted to Bristol”. This shift, much like the shift away from Bristol, happened “a week after [Fygo] started onboarding businesses”.

The Cambridge U-turn was smothered with predictably corporate language: staff were told the ‘North Star Metric’, used to reach ‘maximal growth potential’, had changed and the city was no longer viable.

Staff concerns

Eventually, the fun, go-get-‘em attitude the company thought they needed to thrive started to have an effect on some staff at Fygo. This was despite dozens of full-time staff on the team, and scores of ambassadors marching around Durham.

Ex-staff described how Fygo’s work culture felt exploitative and “all-consuming” during this time, with some reporting working many hours of unpaid overtime, including evenings and weekends.

Working overtime is often expected from employers when working at a fast-growing startup, and unpaid overtime shifts were included in the contracts of Fygo’s full-time staff. The practice is legal in the UK, but only if the additional hours worked do not push the workers’ hourly salary below the minimum wage.

Staff members employed by Fygo on 9am-6pm contracts maintained, “the sheer quantity of work and commitment meant that it was a twenty-four-hour job. I was expected to pick up calls throughout the weekend, throughout the evening, and the whole staff were.”

Former employees were told to use their personal social media accounts to recruit ambassadors in Durham, rather than the Fygo accounts. They had to send direct messages to hundreds of their personal contacts in Durham. “It consumed your entire life, when you’re messaging that many people on your private social media, your inbox becomes flooded.”

Above a Fygo sticker on this lampost, a faded sticker advertises the Purple Pass, a Durham student discount start-up that started and failed seven years ago
Final blows

By November, most of Fygo’s workforce had either left the company or been made redundant. Though some staff had been employed with years of experience, others were students who believed in the product and took time off University to work full-time for the company.

But by the end, while teams got on well internally, many became disillusioned, with the leadership feeling their contributions and expertise were not valued by Fygo. “The founders wanted everything their way”, said one ex-staff member, “we were too small a team to be acting like Facebook”.

Another former employee recalled Fygo’s marketing strategy to illustrate their frustration; “it was very much like this is the idea that I [Fygo] have in my head and, as opposed to coming up with a different idea, I’m just going to keep throwing loads of money and pink stickers at it.”

In November 2021, Fygo announced that they would be having a break in operations. In the post that announced the break — since removed from all platforms — Fygo explained that “these updates […] require more of the team’s attention than we initially thought”, although they did not disclose any more information about the update.

Ambassadors who were recruited to publicise and grow Fygo’s engagement around Durham were also let go as Fygo announced their break. They then set about to change the entire business strategy.

A former employee told us, “They were completely redoing the product and the business model, the concept, which was just so dumb […] they had the intention but, in my opinion, they just didn’t know how to manage money”.

We spoke to several independent Durham businesses about Fygo’s November ‘pause’. Nearly every store said they had not been contacted by the company to inform them of the break.

The manager of one restaurant, on being told by our reporter that Fygo had ceased operations, immediately started ripping down the company’s advertising sticker in the front window.

“The people that worked for Fygo were incredible people”

ex-employee

For ex-staff, the reaction to the is a mixture of bitterness and relief. One said, “I’m so glad they left Durham […] I deleted Facebook and Instagram for a really long time because I was like ‘I don’t want to see these guys anywhere’, and they kept just cropping up everywhere.”

Another said it felt frustrating: “If they had implemented this business model in a larger corporate environment and demographic, it would have worked”. They put the company’s downfall down to “a lot of poor decisions, poor executions” and the founders’ inexperience.

“The people that worked for Fygo were incredible people. The CEO was not so incredible […] so there’s the real reason [for the closure] and there’s the explanation he gave us.

“He just told us ‘you know we could restart and it would be possible but we don’t see it tangibly’. In reality, I just think he didn’t know how to run a company.”

Some staff have found solace by forming a small, unofficial support group of ex- Fygo employees, for emotional discussions and practical career advice. They have urged others who feel adversely impacted by their Fygo to reach out.

We contacted Fygo for comment – the co-founder Jonah Lowenstein responded to reject the accounts of former staff members, calling them wild accusations from disgruntled ex-employees.

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