In a few months, I’m getting married. That means I will spend the next half-year enmeshed in a $100-billion wedding industry that views me and my fiance as a consumer supernova — a bright flash of emotional spending that will disappear (hopefully) forever in a matter of months.
The ephemeral quality of the wedding consumer creates a fascinating dynamic for technology companies that serve the market. Services need to acquire, develop and monetize users within a 12-18 month timeframe, creating an unparalleled sort of urgency for consumers, vendors and technology providers.
One of the largest firms catering to this set is WeddingWire, a Washington-DC based company that provides reviews and recommendations for caterers, planners, photographers and wedding bands in over 50 markets across the US. Founded in 2007, the company came of age with a handful of commerce-driven vertical discovery sites including the medical booking site Zocdoc as well as online ordering giant Grubhub.
Today, these firms face renewed competition from an onslaught of mobile-first startups that want to replicate some of the marketplace dynamics which Uber and others have proven so successful. Last week, Street Fight caught up with WeddingWire CEO Tim Chi, who previously founded education software firm Blackboard, to talk about the changing opportunity for vertical marketplaces, the role of software in building relationships with merchants, and the unexpected parallels between the business of developing technology for education and marriage.
Okay, so here’s a question I ask most startups. Why couldn’t the WeddingWire of today exist five years ago?
My high-level answer would be that that the largest problems with these marketplaces is that they need to get enough scale and liquidity to become valuable. We’ve been building a community for eight years, we’re in over 50 cities and still growing even in our most mature markets. As you get more reviews, the community grows and you start to build a brand and build upon themselves. There’s a point where consumers really get it.
WeddingWire has released a handful of software tools for merchants, pushing into a fairly competitive operations software space. What role do these tools play in the company’s broader revenue ambitions?
The business model is still very Yelp-esque, in that most people are still paying for an advertising product. But we saw an opportunity on the software-as-a-service side driven by the fact that most our small business have less than three employees — most are sole proprietors. So we asked: “What else could we be doing outside of revenues?”
The result of doing that is that it’s helped us build that relationship directly behind just a revenue partner and becoming a solutions provider for them. We all know that it matters because when you’re selling to small businesses, building relationships is so much about trust. And being able to have multiple products that help them be better businesses expands that relationship, allowing us to sell more advertising.
We’ve seen Groupon and others treat software as a loss leader and give it away for free to drive marketing spending. Down the road, do you see the back-office software as a potential standalone revenue driver for the business?
I tend to look at it as entire platform. The advertising and customer management tools should work together seamlessly. Whether the lead comes in from social media, or WeddingWire storefront, it should all flow through the same path and have the same metrics and dashboard. We tend to view the marketing tool side as the of the funnel, and then the SaaS products as the middle and bottom, but it kinds of needs to be agnostic.
I don’t know that we have the final view in terms of revenue yet. But certainly form an offering perspective, we include the software with each package. The ad exposure is driving price differential. We think everyone should have access to the SaaS tools.
One of the challenge aspects of the wedding industry is that there aren’t a ton of repeat customers. How do you manage a customer with a much shorter life cycle?
It’s very unique to our marketplace. You have these classes of brides and grooms, as we call them, who graduate each year. When we were originally pitching the company, the fact that our customers graduate out was one of those things that worried traditional investors.
What’s also unique is that during the time they are engaged they’re hyper-engaged. We see extraordinary engagemeent and usage of the service because there’s a end date put in place, creating a sense of urgency for the folks planning the wedding. The customer acquisition is a little easier because the user is put in the mindset that they need to get it done now.
I would imagine that a large portion of your traffic comes from word-of-mouth referrals. Has social media helped in bringing that word-of-mouth activity into a digital environment where you can facilitate and measure sharing of the brand?
Direct traffic has been growing to our site, and it’s a big component of what we call cross generational word of mouth — essentially, a bride from one cohort telling another about the site. For us, Facebook has actually been less helpful than other channels, because only a handful of a bride’s or groom’s network will be in the market at the same time. It’s sort of similar to the way social media can be used for home buying.
One interesting aspect around social, and we don’t do this yet, is the way TripAdvisor has brought the social graph into trip recommendations. There’s a definitely an opportunity to use social data outside of direct recommendations.
Do you have plans to expand the business horizontally, beyond the wedding industry? How do you think about the edges, so to speak, of WeddingWire’s opportunity?
We tend to think that any type of event that is a major life milestone — where weddings are the biggest — is interesting to us. We feel like the consumer dynamic around purchase behavior is similar. Any time you have an event that’s only going to happen once in your life, it’s generally planned early with a somewhat higher total spend, and typically is a bit more complex and implicitly requires more risk.
What’s even more important is that the supply-side, the vendors and advertisers, tend to be the same folks. Someone who caters a Bat Mitzvah will likely also cater weddings.
A decade prior to launching WeddingWire, you founded education software firm BlackBoard, which went on to IPO. Beyond the obvious differences, what the challenges did you face in building Blackboard that shaped the way you approach developing a marketplace for weddings?
One of the reasons that I thought Blackboard was successful — and this all pre-vertical markets — was that it helped two very different entities (students and faculties) take advantage of a single network. As students we looked at the campus-wide infrastructure which the university built, and wanted to use it in a different way than the university had intended — which was to add and drop classes. We wanted to turn our homework online.
In that sense, Blackboard had two interfaces: one for students, who were fairly savvy, and one for faculty, who were not. That’s very similar to WeddingWire in that we built a network, and the create two very different ways to use it for consumers and then small businesses.
Steven Jacobs is Street Fight’s deputy editor.