I was at a comics store (Chicago Comics) yesterday when a pair of startup guys came in to pitch what sounded like a loyalty program. (I didn't catch the name, but they said something about users getting points called "pixels", if anybody recognizes it.) The owner politely but firmly brushed them off saying that he'd heard from a dozen similar startups and he was just going to wait a few years to see which survived and became worthwhile.<p>So there's a fourth reason: there's enough of these startups that small business owners are sick of you.
This analysis is painfully similar to the last (start-up?) company for which I worked.<p>A huge chunk of my time in client acquisition was first dedicated to education. Things like impressions, clicks, CTR, and god forbid CPM are all jargon to most small business owners. Further, the concepts of geo-targeting or limiting delivery rates while possibly advantageous just make this first step a problem of too many choices. They wanted to be able to open the site (like opening a newspaper) and know they would see their ad and pay a fixed amount.<p>The second problem was then the same that we consistently see on Hacker News about pricing. Because it is a digital medium, shop owners expect the price to be much cheaper than that brick called the yellow pages.<p>Looking back, I can't blame the SmB owners for their resistance to give me their money. If I owned a small business, I would much rather use the money to help fund some community event or provide discounts to loyal customers. I personally believe that SmB owners are better served avoiding most traditional advertising and instead creating ways to better interact on a personal level with their community/city.<p>The only exception I can think of are artists. It would be really beautiful if all the medium rectangles and half-pages were tasteful ads for galleries. If that were the case, I would definitely turn off Adblock again.
This is so wrong it's hard to know where to begin. I work for a very successful local company in Switzerland - have written about it before here - <a href="http://news.ycombinator.com/item?id=2053665" rel="nofollow">http://news.ycombinator.com/item?id=2053665</a><p>The problem with local + is not local, it's us - us geeks. We don't understand it. We expect it to play out like the rest of the Internet - grow community, B2C, performanced based etc and we're wrong. And we're not listening...<p>Some of the fundamentals of local + are;<p>- don't waste an SMEs time. You really want to tell, say, a hair dresser they should spend a morning a week managing their ad campaigns (or similar) instead of cutting hair?<p>- be on the ground with a sales force - 75% of SMEs aren't interested in the logic of why yours in the best idea ever; they'd rather talk to someone they like and hear a sales pitch they can relate to<p>- bring genuine value - i.e. help them generate leads - stop trying to screw money out of them - I'd argue Groupon are an offender here<p>To the idea there's no money to be made, I can only smile.<p>I could write loads more on this topic but already started that here <a href="http://news.ycombinator.com/item?id=2053665" rel="nofollow">http://news.ycombinator.com/item?id=2053665</a><p>Ultimately SMEs are those that need the Internet's help the most and are also those we're failing the most and IMO we're the ones to blame.
I never understood the appeal of doing a local online startup. The conversion rates are not much bigger in local, and your visitors are scattered all across the USA. So suppose you got a 1% conversion rate, and 1 million uniques. That's pretty good: 10,000 buyers. At 1% conversion rate and 100 uniques in 1 city, you're down to just 1 buyer. That stinks. But it doesn't scale because no local advertiser is gonna get excited over 1 buyer.
This analysis is spot-on. Especially when it comes to getting small businesses on-board. Groupon, one of the champions of local, spends massive amounts on educating and selling local businesses on the value of daily deals.
Salesforce is charging my company 1000 euros per month per sale person for what appears to be a rather simple crm. SAP is charging hundreds of thousands of euros for an ERP that is anyway too complex for small businesses.<p>Maybe it is me, but I believe the real problem is that start ups don't take the time to understand the businesses they want to disrupt. They like to discuss about scalability, nosql, complex software stuff, but guess what, probably a simple application in mysql that does know the business is worth 1000 times more.<p>And just to give a practical example about my point, look at how much discussion has generated a rather simple problem on linkedin: <a href="http://tinyurl.com/89ocf8x" rel="nofollow">http://tinyurl.com/89ocf8x</a>.
Stores are a marriage of a logistics business and a marketing business. The split is about 75%/25%. That marketing component is ripe for disruption that directly connects the original sellers (brand, manufacturers, authors) to their end users (consumers, readers).<p>Letting the stores control the decisions about how that connection gets made is not in the entrepreneur's best interest. Making that connection efficient by using your great idea is not in their best interest. That's disruption for you.<p>The winners will figure out how to separate the logistics of local availability from mobile/local marketing.
This strikes me as terrible advice. Local remains wide open for new ideas. Some of the very brightest current startups are local-driven (eg groupon, square). Local is far from "done". Entrepreneurs who can crack the local nut will be rewarded handsomely.
A very interesting and timely article coming right at the time when I am reevaluating the launch functionality for my Asian "yelp-like" startup what2do.asia and after just having a series of meetings with seed/vc investors.<p>The interesting thing is that the Asian local search market has never really been cracked, it is highly fragmented and travel patterns and local search needs are very different. Anyway thanks for posting this and sharing, it has provided some great insights.