WICN Business Beat Interview

A few months back at the Somerville Local First launch party I met a fella named Steve D’Agostino. We talked briefly about what CitySquares was doing, and he spoke passionately about what he’s doing in Worcester for Worcester Local First. We hit it off pretty quickly, and realized how well aligned our missions are. I later found out that Steve also hosts his own talk radio program. Well, today I had the pleasure of being interviewed by Steve on WICN 90.5 FM‘s Business Beat program. It was a 30 minute interview almost entirely about local businesses, their impact on local economics, and of course CitySquares too.

I’ve uploaded the audio file here but you can also find it up on WICN’s website.

Locally Owned Businesses: Superior Businesses

Locally owned businesses, aka independant businesses, aka Mom and Pops, are superior to big box retailers in so many ways. Even though I believe this with every nerve in my body sometimes I forget the nuances and subtle qualities that really drive this point home. I’m guilty of shopping at chains and non-locally owned businesses like 99% of America but I truly and wholeheartedly try to shop locally whenever reasonably possible. I go to Porter Square Books to get all my books and if they don’t have it, I order it. I go to Diesel Cafe for my coffee. And when I shop at Trader Joes’s (yes, I know they’re not “local”) I buy organic foods and coffee beans etc, all in an effort to support whatever and whoever I’m told I’m supporting! Unfortunately I don’t have any locally owned pharmacies near me, so I go to CVS. On rare occasions I may go to Starbucks and I’ve been guilty of shopping at others, like Target, Home Depot, whatever. But I really try to avoid it. This past holiday season Ali and I did 90% of our gift shopping at local businesses. Some stuff we just had to buy otherwise, like a specific Brookstone gift. Unfortunately the days of local grocers are mostly gone, but we do try to shop at local butcher shops and farm stands and such. I do not like Home Depot and I try very hard to go to locally owned and operated hardware supply stores. I’ve learned a lot about Ace and True Value as a result of this and make no mistake about it – Ace and True Value stores are still very much locally owned and operated retail stores.

I think most of the population probably doesn’t concern themselves with this too much. They don’t intentionally go out of their way to Buy Local. When they need a new rake for their lawn, they go to Home Depot or Lowe’s. When they need a coffee they go to Dunkin Donuts or Starbucks. When they need some food they go to Stop and Shop. And the national brands like those I just named have such deep pockets, they can outspend and out-advertise any local guy. They can cast so broad a net that we’re just all victims of their marketing and branding and it becomes almost instinct. You think soda – you think Coke. You think car, you think Ford. You think clothing, you think Filene’s. Ever since I was a little boy sitting in front of the TV eating cereal I’ve been bombarded with these ads. Sears, Home Depot, Circuit City, Macy’s, whatever – I’ve been groomed into this zombie consumer. MUST SHOP HERE. MUST GO THERE. NO OPTIONS.

When I was a kid I went to the same local barber with my dad every 2 weeks, I went to the same hardware store, more often than I liked. Most everything we bought was bought locally. My father is a republican, mind you (or was). He loves Nixon, loves Reagan – so this had nothing to do with politics or policy. It was how he was raised too, in NYC. Neighborhood stores in Brooklyn, the Bronx. So for me, the occasional trip to say, Child World, or Montgomery Ward was, again, occasional. It wasn’t the only choice. Heck, I don’t even remember Wal-Mart as a kid. It seemed to spring up when I was a teenager out of nowhere, but that’s here in the northeast. Anyway, I digress. Point is, I have fond memories of local stores and service providers. I don’t have memories of long and towering aisles at Sam’s Club, or grumpy people standing in lines at Wal-Mart.

So when I started CitySquares back in 2005 it was as much about local businesses, neighborhood businesses as it was about anything else. Our message is clear – BUY LOCAL. But we’re not obnoxious about, we’re not pious about it – we can’t be. And also, we ultimately respect people’s own individual rights to shop wherever they want to shop. At the end of the day, a larger portion of society does shop with their wallets. It’s nothing against local businesses, and they may even understand the value of shopping locally, but for them, it’s a matter of dollars and cents. If they can buy a box of crayons at Wal-Mart for 69 cents less than they can at a local toy store, then there are likely other savings for them and that’s ultimately what drives them. They may care deeply about the economic benefits of shopping locally – and there are many – but they have a family of four and the budget is very tight. So as far as they’re concerned, “thanks for the enlightenment buddy but I’ve got 3 kids to feed and a mortgage to pay!” And we respect that. That’s also why we continue to list non-locally owned businesses. We don’t ask them for their advertising dollars but we still put them on the website. That’s for us to be meaningful and credible.

Anyway, as you see, I’m passionate about this stuff. It’s not just a drum I’m beating either – I believe in it greatly and I believe in the importance of shopping locally as much as the next guy.

To wrap things up, I’m writing this because many people have heard me talk about it before, some people have heard me talk about it so much that it’s making them crazy (but they get it!) and I finally realized that I haven’t really blogged about it at any length. I got inspired this weekend when Ali and I had some very inspiring local shopping experiences. But I won’t get into that right now, I’m only on one cup of coffee and I feel like I could talk about this forever. But I will be talking about this more, you can bet on that.

Google’s Feet On The Street

On Monday Google announced their Google Local Business Referrals (LBR) program in which “local representatives” (essentially 1099 contractors) are paid to a) collect local business information, b) submit that information to Google’s map/listings services, and c) spread the word about AdSense. Google will pay it’s local reps $10 for each business submitted, but not so fast. Here’s what Google says:

You’ll visit local businesses to collect information (such as hours of operation, types of payment accepted, etc.) for Google Maps, and tell them about Google Maps and Google AdWords. You’ll also take a few digital photos. After the visit, you submit the business’ info and photo(s) to Google.

You can earn up to $10 for each approved, verified referral you submit. This includes $2 when a business referral is approved by Google; and $8 when an approved business verifies that the information you submitted is accurate. Referrals are approved by Google based on the completeness and quality of data supplied by representatives. Businesses verify their information either by sending us a response postcard or verifying their information online. As long as your earnings total at least $25 a month, you’ll receive a monthly check.

Well woopie-doo! Donna Bogatin articulates quite well what I think of all this:

Google has announced various partnering schemes with the goal of piggybacking on small business sales force and distribution assets of other companies, such as 1) a Verizon SuperPages.com partnership to “marry its “sales channel opportunities with Google’s vast advertising network” and 2) a Intuit QuickBooks referral button deal to “help small businesses to attract new customers.”

Despite Google’s efforts to leverage the sales efforts of third-party companies, however, the local ad market remains elusive. Not surprisingly, Google can’t even garner sufficient “freebie” Google Maps listings it offers local merchants.

Google is undeterred. Sheryl Sandberg, VP Global Online Sales & Operations, said of the local opportunity last year:

As people do more local search on Google, we provide greater opportunity for local advertisers. In that area we think the market is widely under penetrated, it sounds surprising to a lot of us, but even in the United States, arguably the most developed market in the world for ecommerce less than 50% of businesses even have a Web site, or let alone advertisers, so we think there is tremendous opportunity to bring those people online and bring them into our advertising product.

Is Google biting the “feet on the street” sales force bullet, then? NO! As usual, Google believes it can get away with playing by its own business rules.

I think Google is way out of it’s league here. I’ve often believed that Adwords doesn’t really even make sense for much of the local merchant market, unless they’ve got an active eCommerce function.

Donna goes on:

The Googley local ad sales solution is to offer slave wages to U.S. residents: $2-$10 for hours of labor intensive one-on-one cold-calling, prospecting, ad creative development and sales closing.

What is the going local ad sales market rate? Erron Silverstien, former Citysearch exec and founder of local search play YellowBot recently told me a successful close of a local merchant entails, on average, a $500 investment.

Does Google know better? NO! Google believes it can get away with solicting U.S. adults with a pennies on the dollar pitch: That is the Google Local Search $10 pipe dream!

Greg Sterling takes a practical approach:

Yet unless there’s radical simplification (”just tell us how much you want to spend monthly and we’ll do the rest”) there’s still the issue of the learning curve and complexity of self provisioning for local businesses.

But this is one more piece in a diversified Google strategy to reach the local market.

Matt McGee has quite a bit to say about this matter, and in summary he also believes it will be a failure. Matt says:

I think it’s naive to think that people are going to jump at the chance to knock on the doors of local businesses, take photos inside, promote Google Maps and Google AdWords, fill out paperwork, submit it all online when they’re done, etc., out of the goodness of their heart. You have to provide a better benefit than “you’ll be helping your community find local businesses.”

I just don’t see Google coming into this space, sprinkling it’s Google fairy dust on the marketplace and voila – cracking the code. OK, so maybe Google’s isn’t trying to crack the code, but just penetrate the market a bit more than they’re able. Google should want to penetrate this space, of course they should, but doing it themselves? Gimme a break! And this approach is just silly. I kind of get the sense that this is a desperate move by an increasingly clumsy and goofy corporation that will yield very little. Next step for Google? Snatching up local search players.

Success in the local search market will not come from a giant like Google or Yahoo or Microsoft. It will come from the small startups like, well, like CitySquares.

Doing this “Local” Thing

Ali made a delicious dinner the other night; lobster ravioli with her own sherry sauce. It was absolutely delicious. I guessed that she handmade the raviolis all by herself, kidding of course (right?). She bought them at Dave’s Fresh Pasta, down the street. At Dave’s you’ll find homemade and handmade pastas – very high quality, gourmet style pastas, sauces, and a lot more. It’s a real gem in the Davis Square neighborhood. Anyway, Ali mentioned how nice the person was, who waited on her. She asked for a loaf of bread, but they were out. He then told her that next time she can call ahead and tell them what she wanted, and they’d have it all ready for her. Well… now…. that, folks, that is good service. And that, you only get from your local merchant.

The kind of service you get at Dave’s Fresh Pasta, the kind of care and treatment you get at Massage Therapy Works, at State Street Barbers, at Porter Square Books, is only the kind of service you find where the ownership is local. You just don’t get that anywhere else.

When I see reviews on Citysquares.com from members of the community, of local businesses,and when I hear stories like Ali’s, or from anyone, I can’t help but feel a strong sense of pride and honor. I’m really quite proud to be doing what we’re doing, for the community, for local commerce, from the members of the community across all areas. I couldn’t imagine doing anything else and feeling so good about it.

I’ve learned so much from Citysquares already. No matter where my career takes me in the short term or long term, I will always make sure that I’m involved in a socially responsible business.

User Reviews

I’m going way out on a limb here, and surely many of you may disagree with me, but I feel pretty strongly about this, as a serious consumer and as a serious business person running a startup that connects consumers with local merchants.

Greg Sterling posted an interesting piece on his blog today titled “Opportunity: Online Reputation Management.” I can’t debate the logic here and the basic point that it makes, but I think that the reality of user reviews and how they may or may not influence consumerism is much deeper than indicated. I also think that the user-review value proposition for small, local merchants is not a strong one.

Citysquares.com offers users with the ability to write reviews for local merchants. An interesting example of this is for a new coffee house in Central Square Cambridge, called Andala. It’s probably the best example you’ll get in any urbanized area of the typical small business just getting off the ground. They’re not a Citysquares.com customer (yet). I’ve been there, with my wife, and Chris has been there a few times. I really enjoyed my experience there, and I posted a review. Why? For two reasons: 1, because I truly enjoyed my experience so much, I found the atmosphere, the coffee (I’m a coffee fanatic), and the pastries and so forth very good and it reminded me of my visit to Beirut Lebanon a couple years ago. My wife also really enjoyed it. That experience was, on a scale of 1 to 10, a 9. That’s how strongly I felt about Andala so I posted a review, once I returned home. The second reason is because I want their business and I genuinely want to help them succeed.

Here’s the problem. I am founder and CEO of Citysquares.com, and for better or worse, I only post reviews for local businesses when I feel strongly compelled. I think I’m a typical consumer too – discerning, choosey, but reasonable. I believe that I am like the vast majority of consumers, of all ages.

Ask your friends, ask your family – how many of them add reviews for local businesses? How many of them make a choice to shop at local merchant A vs. local merchant B because of some stranger’s review? I think you’ll find the answer, as we have found, to be not too surprising – that it plays a very insignificant role in local consumerism. But let me stipulate one very significant factors: I’m speaking about local merchants – not products! I’ll get back to that in a moment.

Here’s what I’ve concluded about reviews for local merchants: For the most part, their nice to have, their moderately helpful for a small slice of the consumer market, but by and large, most consumers don’t find reviews of local businesses really all that relevant or meaningful. However, that whole reality gets flipped over on it’s head with one simple difference, and that difference is the almighty dollar. How much cheddar do I plan on spending? That’s the critical factor here.

Whether it’s for a local shoe store, pizza pie, a bar, or for the closest Bank of America, user reviews just don’t carry much weight with the typical, and more importantly, LOCAL consumer.

Now, let’s say I was going to take Ali out for a nice dinner, perhaps within a 30 minute radius of home, somewhere we’ve never been? I plan on dropping a little more loot, having a bottle of wine, in a quiet, romantic atmosphere. Suddenly what other people have to say means more to me. Even still, for me, unless the reviews are dramatically, and powerfully positive or negative, they don’t really impact my decision that much. I can’t think of any situation that user reviews would have a really big impact on my local shopping behavior. Ultimately, I’m looking for X, and I’m looking for it here.

Additionally, part of the fun I have shopping locally is having my own experience – not basing my decision on a stranger’s opinion. Ah, now that opens up a whole new topic doesn’t it – Trust. That’s where this is going? Well, not today.

Back to products. This is interesting because here’s where user reviews take front row – here’s where they take center stage. Product reviews!

Just this weekend I had to find a new boom microphone for my digital camcorder. I didn’t want the stock Canon boom mic, I wanted something else. But I read some reviews on CNET, and sure enough, I made my buying decision.

Take my BlackBerry Pearl for example – a huge jump for me. I went from being a long time and loyal Windows Mobile user to BlackBerry. Before I spent the moolah and made the jump, I wanted to know what others had to say – many many others. I wanted a big sampling of user reviews.

Take my Creative Zen, a new refigerator, humidifier, bicycle, pair of skis, golf club – you name it. I want to know what others have to say – really badly. I bought some new golf clubs this past summer – let me tell you – I probably spent 15 hours or so reading what others had to say about a wide variety of drivers and irons. I’m not exaggerating – just ask Ali, and my brother and father.

Ok, what’s the point here? The point is this: I think user reviews are important for every form of consumerism, whether products, services, local retail, you name it. But ultimately it’s all about the mighty dollar and the impact on me or others around me. How much money I’m going to spend, and how much that decision has an impact on me or others around me. High spend? High impact? Reviews matter. Low spend, low impact, reviews don’t matter.

So if I had a formula it would be:

Total Spend $
—————— = Relevance of user reviews
Total Impact
(distance, pleasure/pain)

That looks more impressive than it really is. Cool

Amendment: Greg and I exchanged emails after he read this blog post and he reminded me of an interesting point that I forgot to address, and that is as follows: In our many many conversations with local merchants, be them in sales calls or for other reasons, local merchants are not terribly big fans of user reviews. They don’t want bad reviews written about them. Surely, they also need to understand that they have a job to do – and that’s to please every customer. Yet some customers simply can’t be pleased, and some use the Internet or a user review platform as a sort of anonymous soap box. Ultimately, user reviews will be a big part of local search and online advertising for the foreseeable future, and certainly that is true for Citysquares.com. But we respect the needs of the local merchants, and while we allow user reviews, we do need to take an editorial approach to them sometimes. Take Andala for example. The user jlobel actually used a word that we could not approve. We did not bar his review, we merely edited the word. If a local merchant believes we’re on their side, and trust us to take user reviews and that sort of content seriously, especially if they’re a paid advertiser, than everyone is happy.

Lastly, on Greg’s point about there being an opportunity for online reputation management for local merchant reviews, I totally agree. Whoever figures that out is one clever person!

Citysquares.com: Part 1

Today I had a meeting with the founders of Spot Story, Aron and Matthew. I briefly met them at WebInno last week. It was at the end of the evening and the room was clearing out, they were still fielding questions and performing demos. We spoke for a couple minutes, exchanged business cards and promised each other we’d speak over the coming days. Today we did that, at Diesel Cafe in Davis Square. During our long, and caffeinated, conversation they asked me about the back story to Citysquares. It was the first time I’d heard that question in a few weeks. As I was telling the story I thought to myself how I hadn’t really told the story on Your Suspect. So, here goes it…

As I mentioned in a previous post, I had been a loyal Sidewalk.com user in the mid/late 90s. I found it exceptionally useful and more readily available than some of the local rags in town. Sometimes I’d find a great event or restaurant on Sidewalk and I’d head out with some friends for a night out on the town. I would tell friends about Sidewalk.com and they’d become loyal users. Eventually Sidewalk.com was gone, and replaced by Citysearch. I was never able to get the same enjoyment from Citysearch. Sidewalk.com was my first experience with what is now coined ‘local search.’

Well, as the years went by and I established roots in Somerville, mainly in and around the Davis Square neighborhood, I longed for something like Sidewalk.com. I worked at Delphi.com and Prospero Technologies starting in 1999 and ending in 2001 (after surviving 3 rounds of layoffs). Those were the dot-com boom days. Even then, with all the hype around this whole Internet thing, I grew exceeding frustrated with the lack of localized content. I still couldn’t adapt to Citysearch. Other local sites like The Boston Phoenix, Boston.com, and maybe a couple others, just didn’t do it for me. I still couldn’t find truly local content.

So this continued throughout the next few years. At times, I’d voice my frustration about this to my wife and she’d agree with me – why can’t we find the hours for her hair salon down the street? Doing a web search (now called “googling” by many) would yield very little, if any, local information about her hair salon. This was frustrating. So we’d pull down, from atop our refrigerator, an old, dusty copy of the Verizon Yellow Pages. It may have done the trick, it may have not. The frustrations remained with us.

In the winter of 2003, it was late at night and I was sick with a really bad stomach bug. I was very ill. I needed some medicine – just something over-the-counter to help me get through the night. Ali was at her sister’s house in New Hampshire for the night. Just down the street from us, here in Davis Square, there’s a pharmacy. For the life of me, I can never remember which pharmacy it is. Is it a CVS? A Walgreen’s? Brooks? I can never recall. Ali laughs at me for this a lot – and I laugh too. But at the time, it wasn’t funny. I’m not exaggerating when I say that it was winter, it was Boston, and it was very cold and even snowing. The circumstances couldn’t have been worse. The problem I was faced with was this: I don’t know which pharmacy it is, I can’t find anything online, I don’t have a phone book anywhere (that I knew of) and I either tough it out and be sick all night long, or I brave the elements and walk into the square to see if the pharmacy was open. That’s it – I just needed to know if the pharmacy was open. If it was open, ok, great, I can find some medicine. If not, I’m in a jam. Ali has the car. What to do, what to do. If this information was available to me online, I could make an easy decision. So, I bundled up and walked into the square only to find out that Brooks Pharmacy was closed. Needless to say, my night only worsened.

It wasn’t long after this event that I’d contemplated building a very basic website with a listing of all the businesses in Davis Square. Davis Square has a vibrant and moderately young demographic. Back in the day, Davis Square was a little seedy, but up and coming. In the 90s Davis had blossomed into a vibrant somewhat trendy community but still with a truly local and Boston kind of feel to it. And Tufts University is right down the street so surely a more transient crowd would dig something like a free online resource listing the businesses and other local resources. (Interesting side note, in 1997 Davis Square was called the hippest place to live in the US by UTNE Reader)

I decided to pursue this idea. I set out to buy davissquare.com. It was already owned by someone (still is), and my negotiations with him went nowhere fast. When I briefly explained to him what I wanted to do, he wanted to be my partner. But I wasn’t looking for a partner, I wasn’t even looking to make this a business. I was just looking to build a really simple, even bland, web based directory of all the businesses in Davis Square. That’s it. No business model, no purpose other than scratching an itch. I didn’t get far with buying davissquare.com. Discouraged, and preoccupied with life, I let the idea slip away. It never quite left me though. From time to time over the coming weeks, months, years I’d become momentarily inspired to do it again – but it never went anywhere.

Fast forward over many less significant but similar moments and experiences trying to find local businesses online, but ultimately resulting in frustrations, to the summer of 2005, August 13th to be exact. I’d been shaving my head for several years, by myself, at home, with a Braun clipper. It was a Saturday morning around 7am, and I was going at it in the kitchen. Standing up, facing the floor, with the clipper shaving the back of my head, watching the short hairs fall to the floor in neat clumps. Just then, the clipper started making noises – scary noises. The kind of noises that make you think holding an electric tool to your skull is a really bad idea. It started vibrating in an odd way. My head was barely shaved! It can’t break now! But it did. After several convulsive vibrations and erratic movements and frightening noises, it stopped working. I unplugged it and just stood there in the kitchen, staring at the clipper, and thinking how I must look like a total freak with only the back of my head shaved. Now what was I to do? I had to find a barber.

Now, mind you, the biggest reason I started shaving my head several years ago was because I’d grown frustrated with the local barbershops. No matter where I’d gone, they all did a lousy job. I’d even gone so far as to go to a couple salons. But I don’t like the salon experience. I grew up with barbers all my life. As a kid, my father and I would go to the same barber every two weeks, for years and years. Now, I was in a situation where I’d desperately needed a barber or a salon – anything to help me.

Here we go again: I “googled” (sorry Google lawyers) “barbers davis square” only to be presented with basically nothing (note that now, when you google “barbers davis square” the first result is for Citysquares.com Laughing). I knew there was at least one barbershop in Davis Square, but it was 7am – were they open? Yes – the same problem folks. The phone book was no help to me because I didn’t know the name of the barber shop I was looking for. I only knew it was on Highland Ave. But what number Highland Ave? Was it 16 Highland Ave or 1600 Highland Ave? Thankfully I wasn’t dealing with a violent stomach illness – only a massacred hairdo. I knew I’d survive this. So I put a hat on, and walked into the square. Guess what? The barber shop was closed. So I went and got a coffee, and soon had a repaired hairdo. The barber had a good laugh.

On Sunday, August 14th, my wife and I were talking, once again, about just how frustrating it was to find any truly local information about the businesses in our neighborhood. What is wrong with the world!? Why is this so difficult? And there it was – square between the eyes – I’m going to do this. Finally. I’m going to create this! No more davissquare.com negotiations, no more frustrations. It’s time for me to do this.

I sat in the same chair I’m sitting in right now, in my living room, and just let the ideas flood my brain. They kept coming. I just started writing the ideas down. I started thinking of brand ideas, domain names, content and feature ideas. Then it hit me again – open source. It’s so easy to build websites now, to build online applications, content management, whatever it was I wanted to do it was nothing like the old days of the web. It wouldn’t cost $500,000 and half an army to build it, and still take a year.

As I became more excited about the idea, I still had the vision of this being a free service to consumers like myself. I didn’t have a business model in mind, I wasn’t thinking about making money with tobedefined.com. I started to tell Ali about my brainstorm. She really is my better half and she has a very good instinct for things – be it people, ideas, just about anything. As soon as she let me explain the idea, she went nuts – she loved it. That was when I knew I had something. It wasn’t because of anything other than Ali’s enthusiasm that really got me moving. I started tossing out domain names to her: Neighborhoods.com? Nah, that’s gone. Cityblocks.com? Nah, that’s gone. Countless others. Ali said, “Citysquares.com?” I said, “I thought of that but I’m sure it’s taken. It’s gotta be taken.” Sure enough, there it was – available. I wasted no time. Nine dollars later the domain was mine.

More ideas flooded my brain, and I couldn’t write them down fast enough. Then I saw the business opportunity. Local businesses, merchants, moms-and-pops, whatever you want to call them – they had to agree, right? They had to see the light too! I mean, they advertise in newspapers, and in the phone book, and a small number even do online stuff, and I already knew for a fact that 60% of all small, local merchants didn’t have a website, and those that did only had brochure-sites. Even those brochure-sites aren’t updated often, if at all. So there was the real heart of it – a lack of an easy way for a business, like a barbershop or a local apothecary, to advertise online and just make their relevant business information available in a single, online, consolidated format. The idea was getting legs, very quickly. It was growing by the minute, but also getting more complex. Just the thing I was looking for.

My next step was to make a call. Bob Leland, my good friend and a colleague of mine at the time, was a brilliant UI and UX guy. He was as good as they get, and more importantly, we’d worked together for quite a while, though thick and thin, and he was my go-to guy for creative visionary type stuff, for online product positioning, for bringing an idea from my mind’s eye to a presentation format. I spent the next two hours on the phone with him, while pacing around my porch, sipping a beer. We just went nuts dissecting the concept and really asking ourselves if this made any sense. He could totally identify with my frustrations with Citysearch and Yellow Pages, and the lack of this kind of information in general, online. Bob loved it, truly loved it. After more than two hours on the phone, we agreed that we’d let the idea sit for a couple days and think about it further and let it all sink in. So, we did.

Over the next two days the idea grew and grew, and the notepads piled up. Ali’s enthusiasm grew as much as my own. On Tuesday, Bob called me and told me he had something he wanted me to see. He sent me five jpeg files with instructions on the order I should open them. They were comps – static graphics for his vision of Citysquares.com. I was floored – absolutely floored. Stunned and floored. I remember the energy and adrenaline swelling inside me when I saw his graphics bring my vision to life.

Over the coming days we had the early makings of a real business. I managed to pull my father into this, and my good friend Chris Miller. On October 13, after 6 weeks of non stop meetings, development, design, planning, and campaigning we had the first iteration of Citysquares.com up online and we kicked it off with an official launch party in Davis Square.

Bob is now my co-founder and VP of Product Development. Chris is our Sales Manager. Fifteen months later we’re still having as much fun as we were in August of 2005. The challenges are totally different now of course. We’re running an Internet startup. But we’re on a mission, and we’re here to stay. Make no mistake about that either – Citysquares.com is here to stay.

Looking back at all the incidents and motivations behind Citysquares, before it was really a concept, I’m really glad that I didn’t do it sooner. Any sooner and it could have been a real mess. The market is ready now, it wasn’t back a few years ago. The technology is available, and only keeps getting more exciting. Users weren’t totally there yet either. Now, in 2007, we’re in great shape to do what we envision.

As Citysquares.com stands today, as a website, a consumer-facing service, and a platform for local merchants to market themselves, we recognize that there’s so much more work to do. It’s not quite there yet. This is the infancy of Citysquares.com. We’ve got lots planned for the next few months, for 2007, 2008, and beyond.

I’ve made this long enough. I’ll follow up with more at a later time. There’s so much more to tell and I look forward to it!

Local Merchants and Adapting to Change

A very interesting post by John Kelsey at The Kelsey Group. Very outspoken and candid reality check for small businesses, and I happen to think he’s right on the money here. I’m reminded of a conversation I had a couple weeks ago with a gentleman in New Hampshire, who was referred to me by a mutual contact. This gentleman was shopping for a Christmas gift for his wife and was at a locally owned jewelry store in the seacoast region of NH. He went in looking for a watch and didn’t quite find what he was looking for.
<!–break–> He still purchased a watch anyway, because it was a matter of convenience. He had an idea, which he shared with me, about an inventory management and distribution system for which a business, such as this jewelry store, could access their distributors’ inventory and special order items. It was more complex than that, but that’s the gist of it. He was aware of my involvement with Citysquares and wanted my opinion on whether or not he thought there was a market for this sort of thing. I explained that while I thought there was certainly a market for it, the reality is that getting local merchants to conform to the requirements of the new technology is a tough sell. Local merchants have their own ways and methods for running their business. Surely there are some standards, like Quickbooks, or Peachtree, and some standard POS and inventory systems, but at the end of the day, they use what’s easiest and most convenient. Asking a local merchant to adapt to the pace of technology and changes around them is like asking a third world nation to adopt environmentalism – it’s a stretch. Unless you can really point out the benefits and make the proposition that they can justify a quick and measurable ROI, it’s really an uphill battle. Unless it directly affects their bottom line, they will resist change. So while I agree with John’s reality check, reality is relative. There are movements all across our country, to prevent the invasion of big box retailers and the homogenization of our communities. Ones that comes to mind is Local First and BALLE. These are not fleeting ideas run by hippies, these are serious and business minded individuals who are doing it, and doing it well (to quote LL Cool J).

Local Merchants: Do they get it?

That’s really the billion dollar question isn’t it? Local search was recently labeled by a friend of mine as “The Holy Grail of the Internet.” I think that might be stretching it a bit, but for the sake of argument, let’s call it The Promised Land. After all, so many are trying to get there, yet no one can tell you what it’s like! OK, now I’m stretching it.

Surely it’s no secret amongst those ‘in the know’ that local search is a hot space. There’s been a lot of press about it over the past year or so (and certainly earlier). I can think of at least three major magazines that Yelp has been written up in over the past year or so, off the top of my head. This week they were in Red Herring. They’ve been very well funded. So have folks like Judy’s Book, and Insider Pages. As I understand it, the latter two are having some troubles. I don’t really understand any of them, but that’s not relevant right now.

Citysearch and Yellow Pages are the two biggest players in the directory advertising space. I can’t say I know their financials and I’m not going to tell you that they’re not performing well, but if memory serves me right and if my homework has been done well, Citysearch barely squeaked out a profit in ’05 for the first time, and even then, that’s after several years of huge losses. Yellow Pages is in a similar situation I believe, although not nearly as dramatic. But folks, please, correct me if I’m wrong! I want to be wrong about this.

So here’s the thing, what does Citysearch, Yelp, Judy’s Book, Insider Pages, Yellow Pages, Google Local, Yahoo! Local and lil’ old Citysquares have in common?

  1. All provide a consumer facing service, online.
  2. All need to build brand awareness.
  3. All need the participation of local merchants.
  4. All need to generate revenue from these local merchants.

So what about the local merchants? Everyone is so busy talking the talk, but no one seems to really be walking the walk. I mean, isn’t the real value proposition for any of these companies to provide relevant, local, accurate information for consumers seeking local goods and services? At the end of the day, isn’t that the objective? I’m sure everyone of these companies will claim, like us, to be doing just that. I beg to differ.

Who’s really providing value for the local merchant? Our customers, at Citysquares.com, expect a return on their investment. Remember that everyone? ROI? As a business owner, we’re focused on ROI. But so are our customers.

Before we launched our site in October of ’05 (sounds like a decade ago, but it was really just last year), we did our homework. We spoke to local merchants. (Don’t be impressed though, please.)

“What is it that you’d like out of this Ms. Merchant?”

“Well Ben, I’m glad to asked. I’d like an easy way to upload pictures of my store. I’d like to display my hours, a description of my business, my contact information. Oh, ya know what else Ben? I have a website. I’d like people to have the option of seeing more about us on our website. We don’t want you to supplant our website, just bring more traffic to it. But really Ben, the one thing I want, after all that stuff, is I want you to bring people in my door.”

“Well that’s a tall order Ms. Merchant, but if you give us a test drive, I can promise you that we’re going to do everything in our power to make you want to renew with us in 1 year.”

That’s where we are today. Renewals. And the question has come up: “So Ben, what have you done for me lately?”And we have statistics for them. We have facts and figures. Can we actually prove how much money we put back into their drawer? No, we can’t. [We are able to track a lot of things for them, but how many nickels and cents we put in their drawer isn’t one of them. (added 2006-12-16 @ 07:24) ]

We talk to local merchants all day long. If they didn’t believe in Citysquares and didn’t believe in our mission, our philosophy, I don’t think we’d be here doing this. If consumers weren’t using us, we definitely wouldn’t be here. As the super passionate founder of this wee lil’ bootstrapping startup, I’ve often wondered if I’m just a pie-eyed fool with his head to the clouds. Then I get a voice mail from a local customer who says, and I quote:

“This is Lisa with [Company] calling. And I’m calling to see if I can do some more advertising with you guys! I’m actually getting more referrals from Citysquares than I am from my Google ads. So, I wanted to talk to you about doing a little more…”

And folks, that ain’t no hype. That’s a happy customer. That’s a customer who bought in when we had less than 400 unique visitors per month, and now is investing more in Citysquares because it’s out-performing her Google AdWords campaign. Hey, not too shabby if I may say so myself. And we’re not even VC backed! That’s a customer that validates everything we’re doing. She validated every sleepless hour over the past month that the three of us have had.

With 300 customers in 14 months, we’re doing OK. We could be doing better. It’s hard work selling to local merchants. If we can get them to give us 5 minutes, we’ve almost always got a sale. But therein lies the quandary! Ah! The whole “how to sell to local merchants” question. Yes, I’m familiar with that debate. We have our ideas, we have our plans. We don’t profess to have the magic wand, but you just wait dear friends.

Now there’s the consumer side of things, right? That’s not so hard. Just demonstrate to the user that we have information for them, specifically the information they’re looking for at that moment. User generated content (like reviews) is just a value-add. It’s a bonus. Like the volume control on my steering wheel. Do I need it? No. Is it nice? Yes. Sometimes I don’t even use it. (Full disclosure: I do not have a volume control on my car steering wheel. Truth be told, I don’t have a car. My wife does though. It’s a Volkswagen Golf and it too does not have volume control on the steering wheel. But I’ve rented cars that do. Now you know.)

Here’s what it boils down to:

Merchants only get it, if we get it. Merchants know exactly what they want. They may not be using an Oracle order fulfillment systems, they may even be keeping their books in a leather bound ledger that’s 12 years old and covered in rubber bands and post-it notes. But if they have a ledger that’s 12 years old, I can guarantee you that this merchant knows more about his business than you know about yours. He’ll look up at you over his reading glasses and tell you you’re wasting your time, and that if you can’t bring him business, he doesn’t care what color your website is. He doesn’t care how many page views you have. He doesn’t care how many people read your newsletter. He’s concerned with one thing – feet in the door, young man.

The young, Internet savvy, Gen-X merchant running her clothing boutique around the corner is no different. She may disarm you with all her sweet smile and warm demeanor, but she knows more about her business than you do about yours. You have to assume that. She understands the Internet and she knows it has it’s place. She may even have a MySpace profile. Wow! She even has a website that she updates herself! Double wow! And beyond all that, she also has a Best of Citysearch plaque on her wall, from 1998. She’s got you pegged before you even open your mouth.

Does she get it? Yes. She’s waiting for you to get it.

I want to be clear about one thing – I’m not Lee Iaccoca. In fact, I’ve never even met the guy. I don’t have the answers. I don’t have the “sell to local merchants” magic wand. I do, however, understand small business. I grew up around them, in my family, and in the communities I’ve lived in. I ran one prior to Citysquares.

Local merchants are having a hard enough time making payroll, never mind getting more unique visitors to their website, or getting more people to post reviews on some web 2.0 website with a pink and bubbly brand. Local merchants are getting their asses beaten all across the nation by Wal-Mart. (I’ll stop myself right there)

I just had a conversation last night with a sports card shop in town. He was going to pay $50.00 per month for web hosting, for a 3 page website, and someone was going to charge him a lot of benjamins for a PayPal store. I had a good chat with the chap. I explained to him that the very same place he purchased his domain name for $8.00 (GoDaddy) can host his website for around $5.00 per month. (This was breaking news.) I went on to explain how they even provide a tool for him to build his own website. (He needed fresh air.) I also explained that for very little money he could use Yahoo! to build a customized storefront, with credit card services, online product galleries, and more. (The phone went dead.) But really, I’m not making this up (I promise I won’t make things up in this blog site). He was lifted to new heights of enlightenment! Then he signed up with Citysquares. He’s now a customer.

Is this the way to sell to local merchants? I mean, come on, from a practical business minded perspective, is this the way to sell? What’s the CPA? Well, that depends on who we’re trying to be, and who we’re trying to beat. I’ll let the future determine that. Feet on the street? Dial for dollars? Direct Mail? “If you build it, they will come?” Sales channels and partnerships? Look at the Google-Intuit deal. It’s brilliant. I don’t see it as the best idea to surface in this crazy space, but it’s a brilliant idea. I question why some people consider it to be such a big deal, but certainly it’s a good sales channel, and a back door one at that. I’m envious.

I don’t have the answers. But I do have one answer: Local merchants do get it.

If I haven’t done a good job of making this argument, please let me know. I’d like to type more, but I’m afraid I’ve already bored you, and it’s 8pm and I haven’t had lunch yet.