Four big players in the local marketing space sat down with moderator Peter Hutto, managing partner at Three Things Consulting, to discuss the latest in the local ecosystem Wednesday morning at Street Fight Summit West in Los Angeles. The imperative of making a small-business owner’s life easier, avoiding overcapitalization, and the growing importance of location data dominated the conversation.
All the speakers stressed that small businesses are looking for actionable insights and ready-made solutions.
“The vision [of Brand Muscle] was to bring together this closed-loop local marketing ecosystem,” Paul Elliott, consumer brands president at BrandMuscle. “We’re trying to help them understand the realm of what’s possible.”
“Small businesses are people who are gutting it out,” said Andrew Morbitzer, VP of corporate development at GoDaddy. “They’re here to do a service or provide a product. They’re not here to use software. [Our job is] removing the decision to take on another capability.”
At GoDaddy, Morbitzer has focused on identifying technological solutions that can serve the vast slate of small businesses that depend on his company. The key is finding solutions that solve problems for business owners before business owners even know the problems need to be solved.
“I start with a team of passionate people who are building something powerful in tech that’s going to push the edge of what we can do for the small business owner,” Morbitzer said. “We tend not to make a move on something that’s reactive. We have a proactive view of how we’re going to provide more capability for the small business owner.”
Eric Remer, CEO of EverCommerce, seconded the motion.
Speaking from the angle of a private-equity investor evaluating tech companies that purport to help small businesses, Remer underscored the importance of “giving business owners what they need in one space.”
The technological solution most likely to be acquired will provide measurable results that are approachable for business owners with neither a great deal of time nor digital expertise, several panelists said.
As for acquisitions, David Shim, CEO of Placed, a location-data and online-to-offline attribution solution acquired by Snap, said he attributes his company’s successful exit to its underlying technology.
Ultimately, Shim said, a technology company’s value hinges on a simple but fundamental question: “Does this actually work or does it not work?”
Placed is at the forefront of the location-tech frontier. The company sees data from over 300 million devices on a monthly basis and can help businesses understand which advertising solutions are actually effective at driving targeted customers into stores.
Placed’s technological emphasis is reflected in the composition of its staff. About half of Placed’s workforce comprises data scientists and engineers, while the sales team accounts for roughly one in ten employees.
Shim and others also cautioned startups against an unbridled pursuit of venture capital. While overcapitalization might make for flashy headlines, it can doom a company looking for an exit.
“We’ve looked at some great technologies, but the economics based on big rounds of capital is awful for your optionality to exit,” Remer said. “If the valuations are not aligned with returns for the next buyer” … PE firms are not going to bite.
Morbitzer put it in even plainer terms. “If you’re overcapitalized, most of the time you’re not going to be on the list for us.”
Joe Zappa is Street Fight’s news editor. Photography by Shana Wittenwyler.