The good folks at TechCrunch are reporting on funding for a new data-centric startup called Locu. The notion is to build a rich, “real-time” database and provide some mix of data upload/distribution services to SMBs. Here’s how the company describes what it’s doing:
Think “machine learning meets mechanical turk.”
There’s an impressive list of smart people behind the startup. The problem that they’ll encounter is around the business model. As more and more companies get into the data business, local business data and “rich content” become increasingly a commodity that companies can’t make money from.
Companies like Localeze have moved much more into services (managing data and real-time updates) for companies as basic data have become more commonly available and cheaper. As Factual’s Tyler Bell has repeatedly said to me, data will become a commodity and it then becomes the additional layers or services that reside on top of the data that create value.
I’ve reached out to Locu for a briefing and will be interested to hear about their model and their plans to monetize. I predict it will be a Yext-like (or UBL-like) distribution/paid inclusion model. However SMB acquisition (they will discover) is very difficult. A vertical approach will help them however.
Local data provider SimpleGEO has adjusted its pricing so that it’s now based on API calls. But it’s going to be harder and harder to make money on data; services to SMBs and enterprises will be different however. But acquiring those customers is the challenge.
September 7th, 2011 at 5:21 pm
your thoughts are spot-on
September 8th, 2011 at 1:35 am
Agreed! Data has become a commodity! The next wave will be about who has defensible data!
September 8th, 2011 at 3:39 am
Locu is utilizing a vertical approach, as evidenced by their first product: MenuPlatform (http://menuplatform.com/). Of course, this is just hint of their larger super-advanced-machine-learning-robot-overlord platform, but it is also a proof of concept that they can take such a platform and spin off individual, vertical-focused products/services (where the REAL money is made!).
My excitement might also stem from the fact that Locu’s site is by far the best designed of any company ever featured ever in Screenwerk, but more specifically of any local data providers. It might seem arbitrary, irrelevant even, but this is how I see it: if a company has a well-designed site that is utilizing the future of web-tech (HTML5 and the like), then they probably are also more hip to where the web is headed, and therefore are going to build a more sophisticated and futuristic product. QED.
September 8th, 2011 at 3:54 am
Google would be the perfect analogy for a company that has built a solid and sophisticated platform that powers a variety of products, many of which make quite a bit of money. Google can use web traffic data to: present search results; sell ads; offer analytics tools; create a full-circle data fiesta which allows businesses to track customers from point of discovery (organic search result, or more likely SERP ad, local ad, mobile ad, or “Deal”) to point of sale (Google Wallet).
So basically Locu just has to pull a Google. How hard can that be?
I wouldn’t worry about Locu’s business model. As local data becomes a commodity, so will the many products offered to SMB’s to “manage” the deluge of data become overcrowded and less valuable. Locu will allow businesses to not only manage their data, but also create a far richer set of data. And if that data set is so rich that it’s ludicrously wealthy, then developers will flock to using Locu’s data set.
September 8th, 2011 at 4:11 am
I spoke to them and I believe they’re thoughtful and have several ideas about monetization. We’ll see how it plays out. But they’ll have lots of opportunity if they make good on their vision.
September 8th, 2011 at 4:25 am
Until Factual or others can show local datasets that approach the accuracy and completeness of the folks licensing business data, I don’t think you can argue its a commodity. If you look at the free local data, the amount available is impressive compared to even a few years ago, but so is the amount of bad and missing data in those collections.
Local business data is very dynamic compared to something like a listing of elementary schools — it won’t trend towards completeness over time, quite the opposite. It just accumulates garbage if not actively maintained.
I do agree that business models around really good local data will change. With so many end users using Google and Yelp for local lookups, it’s a dwindling market of who you can sell accurate business name/address/phone info to. I think the good local datasets of the future will belong to focused services with active and engaged end-users, where a portion of the brand value is the quality of the data.