BiteHunter CEO: Learning From Kayak

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BiteHunter launched amid the height of deal mania this Spring, as an aggregator for dining deals. With the June launch of its iPhone application and subsequent addition of instant deals to the mobile product last week, the company has grown into a “real-time search engine for dining deals,” according to CEO Gil Harel. BiteHunter’s strength is in the diversity of its deal sources says Harel: “We aggregate and analyze deals from multiple sources – a Twitter message, daily deal sites, third-parties like OpenTable, check-in numbers from Foursquare – all in real-time.”

Street Fight recently spoke with Harel, a veteran in the dining vertical, about the aggregation industry and the variable future of the deals space.

The deals space is infested with clones. How is BiteHunter innovative?
The challenge with dining is that it is a very fragmented industry. You have a lot of mom-and-pop restaurants as well as a bunch of players working with restaurants. So the trick is scaling deals across the country without building a Yellow Pages-sized sales force. We built our technology around this problem. We are able to basically pool all available information in real-time and use a powerful engine to process and categorize the data seamlessly. Part of our technology is built around Natural Language Processing (NLP), a tool, which allows us to analyze and translate Twitter messages which are coming from restaurants and identify if and how that message has a real-value to the user. Say a restaurant owner tweets “Happy hour tonight till 8 – dollar of beers — come by.” Our technology will automatically classify this as a happy hour deal and reformat it to fit our interface.

Did BiteHunter build its technology from the ground up?
We didn’t invent NLP. We simply customized the technology to fit an engine for the dining vertical. As the system develops, it becomes more and more efficient. Right now we are doing a lot of manual work, but in a few months the process should be almost entirely automated. And that really enables us to take in any open text and process it into real-time value for the user.

Most deal sites make their money by taking a certain percentage of the transaction, but the deals sourced through NLP are not transacted online. What kind of revenue model are you building around these “passive” offers?
First of all, we are making money like any aggregator — daily deals are a big part of our business. The fact that we focus on dining allows us to pool almost every dining deal site you can think of, and we do take a piece of that transaction. With NLP, we’re focusing on building a great product. So we don’t make money of the NLP data yet, but in the future we definitely have plans to promote specific brands, restaurants and advertisers to different channels. This is similar to what kayak is doing. They have a lead-gen model and a cost-per-click (CPC) model where businesses can advertiser on their site. As we grow, we definitely have plans to head down that path.

Can you give us a little history of Kayak’s business model and how that relates to BiteHunter?
I’ve studied Kayak a lot in thinking about BiteHunter and the dining deals space. When Kayak launched, there were few major players — namely Orbitszand Expedia — who dominated the market by managing both the consumer and business relationship. Then around 2005 Kayak launched as a single engine, which would sit above each of the existing sites and bring all of their data into one consumer-friendly product. When they started, they fell into some serious battles with Expedia and Orbits but eventually found a way to work together because it was a win-win situation: Kayak was able to add value for existing players by sending new customers to their site.

Kayak was not alone in the travel aggregation space. Why did it come out on top?
The key for Kayak was that from the get-go, it was a technology-first company. This gave them an edge in providing information to their users on time and in an accurate way. Still today, that is a big focus of the company. So, I think that’s important.

You founded another dining startup but it didn’t take. What’s different with BiteHunter?
I’ve been doing this for some time now. I worked at Expedia where I managed a pretty big market but in 2005, I quit to start Dining Fever. We were the guys who first started trying to work with restaurants and sign them to exclusive deals, very much like what Groupon and Living Social found so much success with daily deals. Historically, the airlines are first to adopt technology, then the hotels, and then the restaurants. At that time, a lot of restaurant owners were just not comfortable enough with the web to really embrace us – we we’re a bit too early.

And then obviously to scale this model across the country required thousands of feet on the street. We quickly learned that working with restaurants was a difficult process and that we needed a technology, which would allow us to populate our database without maintaining thousands of one-to-one relationships.

Most deals are aimed at urban areas. How can you break into rural and suburban markets?
Since we cover the entire country, our product is very applicable to national and regional restaurant chains. At the moment, we do not include fast food and casual dining but we’ve actually heard a lot of feedback from our users requesting these businesses. The Applebees and Ruby Tuesdays of the world are really dominant brands in less populated markets so this is definitely something, which we are looking to add as we move forward.

White-label deal providers have seen substantial growth recently. How can brand-focused companies like BiteHunter expanded their reach beyond the walls of its mobile/web applications?
We are creating a platform. We already are in serious talks with large travel sites who want to use our platform to show dining deals to their consumers whether on their web site, or on the go with a mobile app. And we’re speaking with car manufacturers as well who want to show our deals on their in-board GPS displays. Simply put, there are a lot of channels available to fulfill what we do in that space.

Although BiteHunter the brand will focus on one vertical, our technology is agnostic. We haven’t thought much about the idea of white labeling or licensing our software just yet, but a few companies who want to use our technology have approached us about the opportunity.

This interview has been edited for length and clarity.