Booker Eyes New Markets, More Capital

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booker_logoLess than a year and half ago, Bain Capital’s venture wing made a $27 million bet on Booker, a company that builds scheduling and business management software for small and medium-sized spas and salons. Now, the startup says it is gearing up to raise another big round to help propel it into a number of new appointment and class-based verticals and hold off a bevy of increasingly well-capitalized competitors.

Booker’s competitive landscape has thinned since its founding in 2010 when the then-emergent cloud software model was spawning an deluge of new point-of-sale and business management companies. Now, the survivors — firms like Booker and MindBody in the services industry and Square and the smaller Shopkeep in retail — are racing to fortify their positions as the market matures, adjacencies converge, and consolidation looms.

Today, these companies find themselves in precarious position, lodged at the intersection of a fickle software-as-a-service model, and a small business market famous for its insatiable appetite for capital. The result is an intense pressure to voraciously expand market share while creating new features and functionality to keep entrenched competitors, aspiring startups, and adjacent providers at bay.

For Booker, the big series B last year brought with it rapid internal growth. A half-filled office turned into two packed floors in a building across from the Freedom Tower in New York. The company added engineering, customer service, and sales jobs. And over the past year, both sales and transaction volume were up over 50%.

Meanwhile, the company’s leadership started to look into other parts of the service industry for room to grow. Toward the end of 2013, the company, which got its start in the spa industry and added salons in late 2012, started to develop the functionality need to support class and appointment-based businesses. In addition, its engineering team took the entire functionality of its app and built a series of APIs — effectively itemized versions of its software — to sell as a white labeled solution for niche players in each market.

Some of the growth came internally; but much of the expansion in new markets came by way of these new APIs. Booker has already nailed down deals with Infor in the hospitality industry and GolfNow, a Comcast-subsidiary that provides a booking service for golf courses. Like many other firms, the company treats these platform deals as a way to enter new markets with absorbing the liability of a sales force. “We love our sales force,” Josh McCarter, the company’s CEO told me in an interview Tuesday. “But an infinite sales force also means infinite costs.”

Meanwhile, the company also faces consistent pressure to expand its product lineup. The local technology market is midway through the long process of consolidating the plethora of features and capabilities which have emerged over the past few years. Scheduling and booking turned into point-of-sale and CRM, which eventually turns into an odd mix between marketing and operations software.

The consolidation has happened slower than expected, admits Matt Mahoney, vice president at Booker. “The path that everyone will go down is already written — it’s just playing out over years, not quarters,” said Mahoney, when I asked why we haven’t seen a spree of acquisitions in the space. He added that the business development deals in local — often a precursor to more meaningful consolidation — have only just started to shift from listings and syndication to scheduling, booking and other commerce-related functionality.

McCarter and his team talk a lot about turning its product into a “system of record” for a small businesses. The idea is move beyond being a solution provider which bundles commodities, to a semiconductor of sorts that touches every aspect of a business’ DNA, from scheduling and booking appointments to search advertising campaigns and email blasts. The end game isn’t more features, says McCarter, its more data.

To reach that goal, the company upped its business development activity over the past year. It nailed down partnerships with Yelp, Mapquest and a handful of other publishers to include booking widgets into their results. Then in June it hooked up with the Israeli firm Como to enable customers to automatically generate mobile apps from their existing profiles on Booker.

In the partnership push, McCarter and his team recognize an important reality of a SaaS business: that networks and partnership are much more defensible than features and capabilities. Quality code can be replicated; an integration with Yelp cannot.

Eventually, McCarter and Mahoney see an opportunity to play gatekeeper for the trillions of dollars spent by brick-and-mortar marketers each year — the bulk of which still hasn’t made its way to digital media. As a “system of record,” the company’s software can start to link online marketing with offline spending, filling an attribution gap that has, in part, slowed the shift in spending to digital tools.

“A couple years down the road, once there is [online-to-offline] attribution, it will make the next Google — or the next three Googles — because the amount spent offline is still multitudes larger than what’s spent online,” says Mahoney. “Attribution was the key to opening the market in the early days of online-to-online advertising so its likely the key again time. The question that merchants want to ask remains the same: is it working?”

Steven Jacobs is Street Fight’s deputy editor.