6 Things I Learned About Local By Failing in Local | Street Fight

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6 Things I Learned About Local By Failing in Local

6 Comments 27 March 2013 by

tackableI remember the bright-eyed conversation I had with my eventual partner Ed Lucero that sparked Tackable. It was 2009, and Instagram was being born somewhere else. The iPhone was brand new, and developers were racing to build apps that captured the power of local information.

There are two worlds out there, I told Ed, the physical world and the digital world. Overlay the two, and things get interesting.

Imagine! You walk past a restaurant and pull up photos of the food people have eaten there. You point your phone at a busy intersection, and see photos of the car crash that happened there last week. You hear sirens blast by your house, and your phone tells you about the fire that’s happening down the street.

Ed began building the idea in the air, envisioning a location-aware bulletin board, where you would post fliers for lost dogs and garage sales. You could fly around the world on your phone, checking into specific places, and seeing what people were talking about on the ground.

It was too beautiful not to build. We didn’t know we would fail.

We talked again and again, narrowing the idea down to a manageable product we thought we could build. Our first iteration was Tackable, an iPhone app where you could ask for photos of something specific, and get back responses from people at that location. Six months later, we pivoted and built TapIn, an even more ambitious project — TapIn took the unstructured data in a daily newspaper and organized it on a map.

A year later, we made a series of micro-pivots: Fast experiments designed to prove out product theories. We built a product (but didn’t release it) called Tackboard, which aggregated data from photo providers, social networks and daily deal sites and displayed that data in automated, location-specific newsmagazines on the iPad. We built a social network for cat photos, took another run at Tackable 2.0 for journalists, and built the product that ultimately became Eventster. Eventster was simple, elegant and our most successful product to date.

Along the way, I learned a lot about what doesn’t work in local. If I could go back in time, I’d deliver this list to myself:

#1: Local is really freaking hard
In one of our first venture capital pitches, the VC across the table cut to the pain point every local startup faces: the local chicken and the egg. You need lots of people to get local content, but you need local content to get lots of people. It’s an impossible problem that most startups never solve. The classic advice is to focus on a single market. Launch it on one college campus, or a single mid-sized city, and build from there. Opening up your product to the entire country at once is a sure-fire path to failure.

The great majority of startups in the local space are not standalone products. At best, they’re making features that bigger companies will adopt and crush them at.

#2: Switching costs are high
If I had a nickel for every local startup I’ve seen that doesn’t succeed in overcoming switching costs, I’d have about $3.85.

Craigslist isn’t pretty, but it works — so launching a Craigslist killer in the U.S. is an exercise in futility. Yes, Yelp reviews are unreliably cheery, as the average person doesn’t feel comfortable rating a business below 3 stars — that said, your “real reviews” site likely won’t take its place. And while Facebook is inefficient for making local plans with friends, no one is going to log into your app and invite their friends to make plans on your platform.

The great majority of startups in the local space are not standalone products. At best, they’re making features that bigger companies will adopt and crush them at.

#3: Local merchants are hard to sell to
The American economy is largely powered by its 3.1 million small businesses. Their GDP this year will exceed $6 trillion, and collectively, they’ll spend billions on sales- and marketing-related expenses. On paper, it makes sense: Build tools that help small businesses market themselves more efficiently, and you’ll unlock millions of dollars in value.

The reality is, it’s much easier to sell to big businesses. Small shops with less than 10 employees get bombarded with phone calls each day from startups just like you, pitching them products they’ve never heard of. It’s hard to make enough money there to build a sustainable business.

#4: Newspapers do a lot of things right
Newspapers figured out how to solve local a long time ago. Consider the average 50,000-circulation daily newspaper. They raised a big initial investment, focused on a single geographic market, hired people to write high-quality local content, and hired a local sales force to sell tangible products to small business owners. Too often, we dismiss newspapers as relics. If anything, they show us how to succeed in local, and how difficult it is to build a sustainable business on local advertising.

#5: Aggregate, aggregate, aggregate (or, steal, steal, steal)
Stop trying to build a network from the ground up. It’s nearly impossible. With few exceptions, you’re doing a disservice to your customers by not showing them data from Instagram, Twitter, Yelp, Foursquare, Craigslist and so on. Aggregating data partially eliminates the “chicken and the egg” problem and gives people a reason to check on your product on a more regular basis. The challenge here is data dependence: You’re at the mercy of another startup’s API. Add enough value to existing data feeds, and build a business from there.

#6: Your team is everything
This is just general advice, and applies to every entrepreneur on the planet. It’s the greatest unknown factor when you start a business, and will make the biggest impact in the long run. Tackable had a great team. We were smart, we worked hard, we had constructive disagreements, and liked spending time with one another. When the company ran out of money, the team continued working and cranked out Eventster without pay. Good teams accomplish incredible things together.

Stangel, LukeLuke Stangel is a technology writer from Silicon Valley. He’s the former founder of Tackable, a location-aware mobile photo platform.

  • Dana Ward

    Some great points here. Only I think mobile has changed what can be done in local. Print is an excellent model to study….but it’s dying. Mom n Pops wanna play ie: Groupon. One would think the web would make it easier for VSB’s to engage an effective mktg scheme…but it has only made it much more complicated and at times expensive. A simple, self-serve, easily managed and affordable model and you may have a local winner.

    • Brooks Lambert

      Dana – that’s our hypothosis, yet still face challenge #3 daily!

      We have a product that takes 1 minute to use, drives same day profitable revenue returning significant ROI, yet its still a slippery road to get traction.

  • http://www.ecape.com/ Julie Brooks

    Very therapeutic (for me, at least) read. Thank you. Street Fight is starting to function as a Hyperlocal support group for me :)

  • http://blog.jippidy.com/ Julian

    Dude, awesome article! This post really highlights how tough the local game is to crack. Why do you think so many companies – small ones and the massive ones – have failed to conquer the local space?! Facebook is a behemoth, but even they are having to throw a bunch of things at the local wallfeed to see what sticks. You raise some most excellent points, thanks for sharing, Luke!

  • Andrew Shotland

    yes, yes, a thousand times yes

  • http://twitter.com/jiakeliu Jiake Liu

    Get to cash flow positive/even fast, and buckle down for the long haul. Local startups can’t rely on the “get big, fast” strategy, but it’s very realistic and honestly not that hard (relatively speaking of course) to build a high margin, low maintenance million dollar business.

    Of course getting to product market fit should still be the number one priority, but I would say it’s realistic to reach a break even point before you hit 100% product market fit. Product market fit in a limited scope, if you will. That means getting enough customers to pay you to survive.

    Joel Spolsky’s recent speech at Startup School, while not addressing the local space directly, makes a lot of sense when he’s talking about picking the “slow growth” path for building a company: http://www.youtube.com/watch?v=b12Qqh2ScuU

    By the way. I cannot agree more with #6. Your team is your most valuable asset *especially* in a “slow growth” company. Everyone needs to have the patience and understanding to be in it for a while. I’d venture to guess most local startups fail when a co-founder decides to leave.

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