Going Big but Staying Local

Posted by Darren on Aug 8, 2009 • (Comments)

This week, I’ve taken the family to West Hampton to relax and reset.  We’re all excited to be together and this is David’s first vacation.  With me is a signed copy of Chris Anderson’s Free and look forward to reading it.

While I’m out here, I’m spending lots of time thinking about the local space.  This space has scared most venture capitalists as many have gotten burned by entrepreneurs who couldn’t figure it out.  I think it has huge opportunity and apparently so does AOL and the Huffington Post based on recent announcements that they have made.

I’ve been tracking a company for a bit over a year now who is starting to make some waves in the local space and am becoming a formal adviser to the company.  I’ll be posting about them probably sometime this week.  In a nutshell, these guys move into small to midsize market with feet on the street and within 3 months, have dozens of paying customers all advertising on a local website that ranks extremely high in search engines.  As once daily newspapers are moving to once weekly or defunct in each of these markets, small business advertisers need ways to advertise and we look to capture that.

Additionally, Sherri and I have been talking about seeding a startup that will be the Last.fm or Pandora for real estate.  My thesis about the market is that there is no lack of listings online, but there is a total lack of discovery about where to vacation, where to move, etc.  I think we’d like to figure that space out.  Anyone else trying this space?  I’ve done some research and haven’t found anyone.

If you are thinking local, lets chat.

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  • Mark
    The local issue is a tricky one. We're invested in a company called Beyond.com. They've been tackling the local job market for a while now. Monster & CareerBuilder have tried to get there from the top down approach...doesn't work. Many other startups have tried and flamed out. Some lessons learned (and being learned) here that I'd be happy to discuss.
  • senithomas
    I cant remember the name, maybe another reader can help, but there is a site where you can input your vacation dates and stuff you like, then the site returns all the cool events (music festivals, racing, local art events, etc.) that are occuring during those dates. Runs on an affiliate system with travel sites like Kayak.
  • sounds interesting
  • I am involved with a new startup called TownSync.com that is attempting to tap into the local market. The site is a social calendar based on zip-codes.
    The beauty of the site is that everything is locally oriented but you can still visit other towns to see what it's like and what's happening - this is similar to what you say about discovering other towns. We are obviously gambling on this local market and people looking for a place to share locally.
    I enjoyed your post, if you have any feedback for us it is always appreciated.
  • Micah, thanks for swinging by. I just got your email and responded.
  • Ironically I've spent some time recently toying with both spaces. Originally as separate ideas, but have been trying to figure out if there's even a blend between the two. Anyway, I'm more than happy to chat about it and share with you what I have found thus far. Shoot me an email or @vrikhter me.
  • To go big and stay local you have to figure out how to get locals to contribute and non-locals to consume. You have to capture the transaction and get credit for making it happen. You need to move the consumer from exploration and search to planning and purchase and find a way to do this while leveraging the same infrastructure/tech in multiple markets. Scaling revenue across markets while maintaining a reasonable cost base is the holy grail of local. I agree that someone will crack the code and that when they do, the opportunity will be massive. Figuring out the go to market that can be duplicated in each market and the efficient path to traction with vendors and consumers is the first step but the brass ring is a method of transaction capture that does not require deep POS integration or consumer education.
  • our thinking is very similar.

    What i like about local is that with enough local properties, you can create a network, which is potentially more powerful than a national network working from the top-down and trying to get local.
  • I agree on the power of the resulting network in a bottom up, local
    approach vs. a top down national approach. The hurdle for investment
    is a willingness to bet on the promise of a network. To do this, VC's
    must get comfortable with the capital requirement and time requirement
    to realizing the network effects. Identifying a strategy that allows
    each node in the network to be sustainable as an independent service,
    maybe with linear growth expectations, and then using the links
    between nodes as an accelerant to the business model would allow for
    testing of the hypothesis and capital efficient de-risking of the
    business.
  • But the investor who sees the opportunity should be comfortable with going in for the long-run. There are atleast 10 solid strategic buyers of a company who can execute on this promise, so as long as the team is solid and a market penetration plan is worked out, then it should minimize the risks and be a fruitful investment.
  • The market penetration plan will be a good topic to discuss further. I think we are reading from the same chapter and soon will be reading from the same page.
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