Local 1.0

I believe that this local search thing is quite early, and to keep up with the Jones’ I’ve started to refer to it as Local 1.0. Hear me out here, because I’m diving deep.

Web 1.0 was a passive web, about adoption and about moving to an interconnected digital medium, and Web 2.0 is very much about participation, creation, and transforming that interconnected digital medium into a platform. Just as Web 1.0 was static, passive, and largely about adoption, so is local, today, and as we’ve come to know it.

Resourceful Idiot does a pretty decent job of explaining the iterations of the Internet. He starts by saying:

“You can group each of the ‘Web x.x’ as a different movement when it comes to internet usage. Web 1.0 is the movement that took place during the beginning of the internet.”

Web 1.0 was about adoption, and about the movement of media, business, and commerce, to the digital medium that is the World Wide Web. Everyone was moving online to reach a larger audience and achieve better efficiencies. The first to move was big media like newspapers, news stations, music, magazines, etc. Everyday services and resources went online, like the post office, libraries, phone books, the dictionary, the encyclopedia, public transportation services, travel agencies, shipping services, mortgage companies, banks, day trading. Consumer services, business services, B2C, B2B, all of them were moving their data and content to the web. All of this content was mostly static, and that was fine. Continue reading Local 1.0

Citysearch Acquires Insider Pages

Well first, I’m just glad I didn’t have to watch this get drawn out. Some M&A rumors have a way of getting way out of control. Theories, napkin calculations, he said-she said. But about two weeks ago the rumor began, and here we are with the news that Citysearch has acquired Insider Pages for an undisclosed amount. I’ve referenced various sites and blogs, that I regularly read, at the end of this post and will continue to add to this list as it grows and opinions are voiced.

Ultimately, I’m not an M&A expert and I can’t even begin to estimate Insider Pages valuation. I’ll leave that to others, and already there are theories, critiques, shock, even applause. I think the rumored price is interesting though. Insider Pages, an Idea Lab company if I’m not mistaken, raised somewhere around $9M over just about a year ago. Let me say that again: $9,000,000 raised 1 year ago.

My jaw is firmly stuck to the floor. I think my shock is obvious, but perhaps I should shed a little more light on it, and it’s really quite simple – $9M in two years and they couldn’t do better than that and only get acquired for $12M? You know, I betcha someone is popping the cork on some expensive bottle of champagne too, while packing away Aeron chairs and a Brunswick pool table. Someone is celebrating. Others are not too pleased. I can’t imagine the investors are very happy. I’m sorry but I think this is sadder news for the rest of us.

If anyone out there wants to talk about the bubble, or is reminded by events over the past year that smell like the bubble, let me just say that this is not helping the cause. It’s activity and deals like this that spoil it for the rest of us! It’s bad enough that I have to contend with macro economics, fed chiefs talking about recessions, market drop offs that look like an algebraic symbol on a chalkboard, but now I gotta contend with this? Frankly, I don’t think we’re even remotely close to a dot-com bubble, but there are skeptics and theorists, and this Insider Pages activity only gives them more ammunition.

So, congratulations to Insider Pages. Congratulations to IAC and Citysearch.

I look forward to IAC imploding the Insider Pages brand, extracting the marrow from Insider Pages ‘database, and cross-breeding it with Citysearch’s database, and only making a bigger mess. If there were loyal Insider Pages users and/or customers, I’m quite comfortable predicting that they’re all going to fade away and find another site/service that had the same values that first attracted them.

Hey, IAC is a contender, I recognize them, I give them props, and ya gotta respect them – they’re the monster around the corner.

Some whales eat krill, others feed on schooling fish. IAC is a whale, and clearly this whale needs to eat. It should be interesting to see how long this meal lasts for them, until they get hungry again.

Links:

March 1, 2007:

March 2, 2007:

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!

Fond memories of Sidewalk.com

John Kelsey has a nice piece on The Kelsey Group blog about Sidewalk.com, and Steve Ballmer’s regrets of dumping it. I have to admit that it’s nice to finally see some acknowledgment by Microsoft that this was a mistake. Because that’s ultimately what it is. Sidewalk.com was a fantastic site back in the day. In the mid/late 90’s I used Sidewalk.com quite a bit. I used it to find music shows in Boston and Cambridge, to find restaurants, and so much more. I really think Sidewalk.com was one of the best “local search” sites that’s ever existed – and mind you, that’s before the term “local search” was ever in our vocabularies. Every since Citysearch purchased Sidewalk from Microsoft in 1999, I think it’s fair to say a lot of people were disappointed. I remember just a few months ago I was presenting Citysquares.com to a group at Babson and I fondly mentioned Sidewalk. A couple people in the audience quite exuberantly nodded their heads as if they knew exactly what I was fondly recollecting. Over the past year or so, fans of Citysquares, or just about anyone that I’ve mentioned Sidewalk to, also have fond memories of Sidewalk. Anyway, suffice to say Sidewalk left a very good impression with a lot of people.

Can there ever be another Sidewalk.com? I don’t think so. It was the Model T – the first of its kind.

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.