Originally published on Streetfight as Doubling down on SinglePlatform
So here’s the thing: it turns out that selling online services to small businesses is really hard. OK, so that’s not exactly a revelation for most people who read blogs about “the business of hyperlocal”, but banalities aside, the thing about truisms is that they are fundamentally … true. And so far this one has been no different. Ask anybody who’s walked into a small business selling hyperlocal advertising and they’ll tell you - your average small business has a limited budget and even less time to spend on their online presence, and those that do want to see short term, tangible returns on their investment. And yet ... everybody from Google to Groupon to Foursquare is fighting to “own” the relationship to the local business because of the multiples of billions of dollars in associated advertising spend. We’ve seen resources allocated at a massive scale in the online hyperlocal space, and yet there is no single company that can come close to saying that they own that small business relationship. But there is a company out there that looks like they might have a shot to pull it off, and they’re called SinglePlatform.
NYC-based SinglePlatform was launched in January 2010 by CEO Wiley Cerilli, previously a founding partner and EVP of SeamlessWeb. Cerilli founded SinglePlatform to help restaurants to expand online by providing a one stop shop for building a digital presence (i.e. websites, Twitter, and Facebook). Almost two years later, they claim to have information from hundreds of thousands of menus in over 13,000 cities across the United States in their listings database, which would indicate that they’ve been noticeably successful in the space. But ascribing SinglePlatform’s success to a niche play in the restaurant space would seem to miss the point, especially since they’ve started to move beyond the world of restaurants and are beginning to offer services to businesses in other verticals who are selling other products. So they’re not all about restaurant menus. In fact a better way to think about SinglePlatform might be as the distribution point for a business’s digital storefront - ‘distribution’ being the key term.
It’s important to note that there’s actually two constituencies in the SinglePlatform universe: the small businesses that provide the information, and the publishers that distribute it. SinglePlatform has built a broad network of digital publishers, from major media companies and IYPs to data providers, mobile applications, hotels, and universities, who all use SinglePlatform to distribute content about the local businesses in their network. For example, if you click on the menu tab on a restaurant’s review in The New York Times, you’ll see a menu that is powered by SinglePlatform. The value proposition to the distributor is clear: one of the first things that any user who’s researching restaurants is going to look for is the food that’s on the menu. By providing that content onsite as a menu instead of linking to a restaurant’s web page, they can improve core metrics like user retention while offering a superior user experience. SinglePlatform can also provide analytics that shows users accessing menu content in real time, so ROI is demonstrable and immediate.
There’s immense value in this ecosystem. At some level, local businesses are beginning to realize that the effect of the Internet is to essentially comoditize the sale, and so it has become crucial to reach potential customers at the point at which they’re making a purchasing decision. Thus, wide-scale distribution and access to the publisher network is perhaps the most compelling reason for SMBs to join the network. What we’re talking about now are network effects, and network effects are the stuff that great businesses are built on. Specifically, SinglePlatform has built a network of two distinct groups - businesses and publishers - that exist symbiotically … otherwise known as a two-sided network. The value of a two sided network is that, besides being self-perpetuating, they are reliant on the platform that connects them to establish a pricing structure that can maximize the value of the network. For example, the more businesses that list their products on SinglePlatform, the more incentive there is to potential publishers to join the platform. And the more publishers that join the network, the more value there is to existing and prospective businesses. And so if SinglePlatform has figured out the right way to maximize value for each of the participants, it’s going to be incredibly difficult for a challenger to come along and replace them in that ecosystem.
The real test for SinglePlatform, as with most companies in this space, is going to be to figure out how to continue to scale and grow. The fact remains that even for an organization that really understands how to sell to a local business (as it appears that SinglePlatform does), building a local sales force at scale is an immensely expensive proposition. This is doubly so when you expand outside of the major DMAs (as a company like Patch will attest) since you can’t exact the same efficiencies in smaller towns as are available in more densely populated areas.
So the question for SinglePlatform is ultimately one of ROI - how to manage costs while at the same time continuing to increase the rate of return for their themselves and their customers. In this case, managing the “Investment” side of the equation really means managing the cost of sale. Presumably there are opportunities to move existing customers towards a more self serve option, so that the sales organization is mainly focused on new customer acquisition. Similarly, integration at the point of sale would enable SinglePlatform to automate some parts of the data acquisition process, while at the same time reducing the investment (in terms of time) required from businesses to keep their listings up to date. Both of these solution have their own complexities, however, and driving adoption with the SMBs here is far from a given.
Alternatively, the “Return” side of the equation is mostly a function of distribution. How can SinglePlatform continue to grow their network in order to extract a much value as possible from each business listing? This, in my opinion, is where the really interesting product opportunities exist for SinglePlatform, because what we’re really talking about is monetizing a structured database of product inventory (what are menus, after all, but a list of a restaurant’s products?). But that’s a topic for another blog post.
So it’s true - selling to small businesses is really hard. But here’s something else that is capital-T true: local is a massively huge market, and so are the rewards for any company that figures out how to own that relationship to the small and medium business. Can SinglePlatform do it? I wouldn’t bet against them.