HelpHive Aims to be ‘Yelp for Home Services’

That’s not their description, it’s mine. But it captures the way in which the new home services vertical is trying to provide more depth and community tools to both local consumers and vendors.

Beyond the yellow pages, Angie’s List, Kudzu, InsiderPages and Yelp itself (among still others), there is ServiceMagic, the 900 pound gorilla in the home improvement/repair segment. However the user experience at ServiceMagic leaves a fair amount to be desired.Trulia and Zillow are also adjacent to this segment and could easily try to enter it. Zillow has taken some baby steps in that direction and can be expected to eventually do something more complete.

More immediately, there have also been two recent site launches that I’m aware of: ServiceLive (from Sears) and LocalPrice, which is in Atlanta only. And now HelpHive:

HelpHive founders Dave Richards and Karim Meghji are trying to bring much more depth and content to the user experience than they feel currently exists on other sites (though this idea exists among other publishers/entrepreneurs in the segment as well). Here’s their story and philosophy. At launch, the company has “6,500 home services businesses covering more than 45 categories.” Wisely they’re focused on a single market for the time being but will eventually roll out to other cities.

In addition to trying to generate more content for users, Richards and Meghji have created a wide range of tools for businesses that allow them to provide lots of detail about their work and projects, as well as specify how they should be contacted. Indeed, they believe a HelpHive presence would/could/should be a viable substitute for a website for those vendors/contractors that don’t have them or that have awkward or under-performing sites.

Most interesting to me about the business tools is a message center that allows consumers and businesses to communicate through the site using voice. (Startup Search to Phone does something similar but in a somewhat different context.). Here’s a screenshot of the business-facing message center:

Finally, HelpHive seeks to tap social media to extend distribution and reach. Here’s the site’s Facebook fan page:

Clearly HelpHive is a smartly designed site and its founders are very thoughtful about the space. It’s just that the segment is very crowded. Yet, curiously, there really are no consumer “brands” per se among the home services specific sites — save perhaps Angie’s List, which requires a consumer subscription. (Angie’s List is much broader now than home services, but that’s still the primary association.)

If you were a VC and saw a deck that pitched HelpHive and made some of the claims the founders are making, would you invest?

Oodle Traffic Up, Raises More Cash

Oodle announced what may be its fourth round of funding: $5.6 million from existing funders Greylock Partners, JAFCO Ventures and Redpoint Ventures.

Oodle also said that it has crossed the 10 million monthly uniques traffic threshold.

Oodle has created an impressive network of partners, which include Walmart, MySpace and Facebook. The company has positioned itself in some respects as the anti-Craigslist, seeking to improve upon or compensate for what it perceives to be the deficiencies in Craigslist.

I also don’t believe Oodle has any competitors at its level of scale among “horizontal” sites (except, when I first posted yesterday I competely forgot about eBay’s Kijiji):

This chart is undoubtedly inaccurate but shows trends directionally.

Yodle Gets More Funding, SMBs Still Elusive

Yodle announced a $10 million C round this morning (funding details covered on Techmeme and related articles). Yodle has a technology platform but is positioned more as a direct sales channel, like ReachLocal. Marchex and WebVisible are local SEM platforms that offer fulfillment and management for other sales channels (i.e., YP, newspapers).

Yodle CEO Court Cunningham is one of the most forthcoming of the executives in this segment. He had previously told me that he thought the company was on track to be profitable by Q1 2009 but the economy has set that back apparently. TechCrunch reports that the company will be profitable “within six months.” It also says the company has roughly 5,000 advertisers.

Five thousand is some kind of magic number it would appear: StepUp had about 5k advertisers when it sold to Intuit and Merchant Circle said previously it had around 5K advertisers. However ReachLocal had roughly 12K advertisers, as of Q3 last year. By contrast, YP publishers have hundreds of thousands of SMB advertisers. Google may also.

None of the SMB/local search marketing firms has broken out of the pack, partly because no one has done much visible marketing for themselves — not even YouTube videos.

Over at SEL I’ve written up some data from WebVisible-Nielsen on the gap between online consumer behavior and SMB ad spending. This is something I’ve written about many times in the past, but the data do a nice job of showcasing that gap.

Specifically: 26% of SMB survey respondents have used paid search while 82% of consumers use search engines (the #1 method) to find local businesses.

Consumer usage trends over the past two years

Source: Nielsen-WebVisible (1/08), n=4,000

Yet More Money for Angie: $7M

I got this this morning in email:

Angie’s List announced today that it has welcomed another new investor to its privately held organization.

The Chicago-based Prism Mezzanine Fund invested $6 million in subordinated debt funding, as well as $1 million in equity investment, in the nation’s leading source for local service provider ratings.

Angie’s List earlier this year announced investments from Boston-based Battery Ventures ($35 million) and Menlo Park-based Lighthouse Capital Partners ($18 million). Bill Harlan, a partner at Prism, attributed his firm’s interest in Angie’s List to the company’s growth potential.

Angie’s List Gets $18 Million More

Here’s an interesting item, which many of you may have already seen:

Angie’s List, a provider of consumer reviews of local services, announced on Tuesday that it has received an $18 million venture debt investment from Lighthouse Capital Partners.

In April of this year the company got $35 million from Battery Ventures. The stated reasons for the additional funds are “continued growth, including an international expansion.”

The legendary Angie herself is making an appearance, I believe, at the Kelsey show in Santa Clara this week.

CityVoter Closes Second Round

CityVoter closed a second round of funding for $2.6 million. It was announced today:

CityVoter.com today announced it has closed a second round of funding for $2.6 million. Second round primary investors include Allen & Company and Series A investors Dace Ventures. The company welcomes Curt Viebranz, former CEO of Tacoda, Bradley Wechsler, co-CEO of IMAX, and media investor Vivi Nevo to its advisory board.

CityVoter has been chugging along, adding partners. Recently the site added Hearst’s SF Chronicle as a partner. CityVoter uses voting to generate top lists rather than asking users to write extended narrative reviews:

But where’s that iPhone app?

Looking for ‘Plan B’

One of the striking things to me about Internet entrepreneurs and VCs is that almost no one is seeking to create long-term value or build businesses that will be sustainable and be around in a decade. Many will deny this but if you look around, the Craigslists of the Internet are anomalous.

Most Internet entrepreneurs and their funders are identical to real-estate speculators — I don’t entirely blame them given how many people have made money in this way. They make something look impressive in the shortest amount of time in the hope that there will be a bidding war and they’ll get 5X to 10X (or more) the original money invested. In other words they’re flipping the business in the same way that people (used to) flip houses during the real estate bubble.

A few companies go public, but most do not or cannot. A few companies run out of money and are forced to sell. And, increasingly, a few just run out of money.

Whenever I encounter an entrepreneur who is seeking to build a business or is passionate about an idea and trying to bring it to life — without regard for whether it will be bought — I’m impressed because a long-term view of the market is both rare and exactly what’s needed to make many of these ideas succeed.

Such “sober” talk surfaced after the first dot-com bubble burst in 2001 but vanished a few years ago as VC money flooded back into startups and M&A activity started to pick up. This time it was often fueled by competition among a handful of big Internet companies — Microsoft, Yahoo, Google, AOL, News Corp. and a few other traditional media entities — seeking to out-do one another with new features/tools or fearful that an arch-rival would get the prize and not them.

But what happens when you try and sell but can’t? Like a house you have to lower the price. But many VCs/entrepreneurs resist this idea.

Digg may be an interesting case-in-point. Google was reportedly in the hunt to buy Digg for around $200 million and was very close, according to rumors. However, TechCrunch now says that Google has walked away from the deal. TechCrunch speculates that the company will just raise another round and keep going.

But my guess is that the founders were hoping for a big, near-term payday and are tired of running the company. I don’t personally know any of them. But I can imagine the expectations of selling had been growing and, psychologically, it’s very hard to return to business as usual once you think you’re done.

Digg probably never saw itself as a sustainable long-term business. It probably saw itself as a “cool” opportunity filling something of a hole online. Ultimately (say 3 to 5 years) everyone probably expected the company to be picked up by either an Internet heavyweight or a traditional media company. That may still happen.

But what if they now need to think about being there 10 more years and calibrating the cost structure to a sustainable revenue model? It requires a big psychological shift that may even require new leadership because it’s just too hard for the current management to make. I’m just guessing about all this of course.

Stepping back, it strikes me that there’s something quite “dysfunctional” going on in the way that many entrepreneurs and funders think about building online businesses. Historically people in the real world who start businesses have not gone in with the attitude: in three years someone will buy me and I’ll never work again or maybe I’ll go start another business that will be acquired in another three years.

Maybe this recession and another “correction” in the Internet market will reshape attitudes. But as long as there is money to fund half-baked ideas and companies built around needs that don’t yet exist, I’m not so sure.

___

Related: Silicon Alley Insider dismisses Digg as a business. I actually think there’s an interesting business as a “recommendations engine,” for products and services, which the company launched but hasn’t yet developed.

Trulia Gets $15 Million More

On a difficult day for non-iPhone announcements, Tulia announced that it had secured $15 million more in funding. From the release:

Trulia will use this round of funding to further its development of new products and services for homebuyers, agents, brokers and advertisers and to expand their advertising services for the recently launched Trulia Advertising Network and self service offering, Trulia Pro. Trulia.com has raised a total of $33M in Venture Capital.

Eventually Trulia will have an iPhone app, as will Zillow. Properazzi announced its iPhone application today:

According to Hitwise, here are the top US real estate destinations for May:

Outside.in Gets Money, New CEO

Mark Josephson, who was President of Seevast Corp. (formerly Kanoodle) and General Manager of About.com, has now become the new CEO. Co-founder Steven Berlin Johnson moves into the role of “Executive Chairman.” The company also gained another round of investment from Union Square Ventures, Milestone Venture Partners, Betaworks, and some angels.

I spoke to Mark yesterday and we discussed the company’s evolution and its strategy going forward (as they say). Mark’s job now is to turn some terrific thinking about local and hard work to realize an early vision into a sustainable economic model. That involves both a syndication and a destination strategy. He indicated there will be partner announcements forthcoming. The company has an existing deal with the Washington Post.

Josephson’s experience at About.com may be particularly relevant to the company’s future strategy (hint, hint). There’s a lot of terrific information that the site is capturing and organizing. One question, from a user-experience perspective, is how to make it simpler to get to and get into, how to sift through what I’m interested in and what I’m not interested in.

The site was almost unusable when it launched and has made great strides, but still needs refinement to make it truly useful. There’s a ton of valuable “hyper-local” information there. And Steven Berlin Johnson has been particularly thoughtful about the issues surrounding local relevance.

Bringing in Josephson is also an example of a business that had a very strong founding vision but was at a point that it needed another person with a different skill set to “take it to the next level.”

Spot Runner Raises Another (Really) Big Round

Spot Runner seems to keep raising money. Today the company is announcing another mega-investment round; this time $51 million, from Daily Mail and General Trust (DMGT), Grupo Televisa, Legg Mason Capital Management and Groupe Arnault/LVMH, along with some existing investors.

That brings the total money raised to date to more than $100 million. Ka-ching!

The official word is that the money will help expand the scale and scope of existing operations as well as major international efforts. Spot Runner has been a takeover target for some time but the size of such a deal now would need to be very very large. The valuation must now be several hundred million dollars. The company is rumored to be profitable and could be an IPO candidate at this point. (Several prominent hires could suggest something like this.)

Spot Runner made a few strategic miscalculations in the past, which it has arguably now corrected by buying Globe Shooter and Weblistic, now being integrated. The company is moving toward a multi-platform media buying strategy in which agencies and marketers can integrate both online and offline media buys — and localize them. This is the future and Google is pursuing a similar vision in a somewhat different way. (See also my post on Live Technology Holdings.)

Seen as a video platform or “agency” for SMBs — the company has come a very long way from that original vision — Spot Runner faces increasing competition from smaller startups; there are probably 10 or so one could point to. But here’s the “secret sauce” and what makes this company potentially extremely valuable for not-so-obvious reasons: addressable advertising.

Brandweek has a good story on this coming phenomenon in TV; it’s partly what the future vision for Google TV is too:

Industry watchers say addressable advertising—the ability to target TV ads by household so that, say, a 50-year-old man watching Lost would see a different ad than a 14-year-old girl watching the same show next door—is getting closer to a national rollout.

From the same article:

In the meantime, some advertisers are flocking to what may be the only form of national addressable advertising on the market. Spot Runner, a local television advertising firm in Los Angeles, is helping advertisers adopt addressable advertising on the local level through national buys. The company did so last year when Warner Independent Pictures released The Painted Veil. It targeted ads for the art house film to mature female viewers in the 18 specific neighborhoods where the movies were playing. Gus Warren, vp of strategic partnerships at Spot Runner, said even without set-top box capability, Spot Runner can target as few as 500 homes with the right commercial.

(emphasis mine.)

So Spot Runner is a localization and an emerging cross-media buying platform for agencies and advertisers, but it can also deliver something today in television that others cannot — as TV comes under increasing pressure to justify ad rates.

Transparansee Still in the Game

A couple of years ago I met Steve Lavine, the CEO of Transparansee, which provides a range of search capabilities to publishers and content sites. Lavine was featured at DEMO and seemed to be on a fast track to raise a venture round. However he told me in a recent catch-up conversation that the company did not end up closing the round.

But the company gained customers and is currently about to announce large two strategic deals. Lavine said it would also reach profitability soon. That’s a lot to say in this environment, especially for a company targeting local markets.

Lavine said he may want to take VC money for the next round of growth but was relieved that he didn’t have to.

The Shakeout: Starting to Happen

This LA Times article reflects something I’m starting to hear and see directly — funders and boards walking away from startups when they don’t see a near-term, reasonable exit:

In recent months, some start-up technology companies have died or gone into comas after running out of money, a possible early sign that the resurgence in venture investment may be coming to an end.

This has been going on for a little while in local: Backfence, InsiderPages, JudysBook, Edgeio, among others. It marks the return to an era of “business models” (from a focus on eyeballs/traffic) and is troubling for local, which takes more time and patience to succeed. To use a pretentious wine analogy, if the broader Internet is a Cabernet, then local is Pinot Noir (sorry about that).

I argued previously that this site would go from a catalog of Web 2.0 companies to the “Web 2.0 graveyard” as most of these startups would fail to gain adoption and run out of money. Accordingly, this year, stretching into 2009, will be a critical one for new startups and relatively young Internet companies.

EveryScape Raises a $7M Series B Round

Virtual World/3-D mapping site EveryScape has raised a $7 million series B round. According to the release, it was led by new investor Dace Ventures, but included existing investors Draper Fisher Jurvetson, Draper Fisher New England, Draper Atlantic and LaunchPad Venture Group.

The release says that “EveryScape will use the financing to grow its sales force, accelerate new city launches and fuel new community features.” EveryScape is a great site with a shaky business model in my opinion. It has some licensing revenue but the company was trying to sell interior images to local businesses.

As I’ve argued previously this is going to be very tough for the company. But the consumer product is terrific. The new funding will give the company some additional runway. Between now and some hypothetical then a new more efficient model or strategy may emerge.

___

Related: Google makes it easier for local municipalities to add 3-D images to Google Earth.

TurnHere Raises $7.5 Million for Expansion

Here’s the press release:

[TurnHere] today announced that it has secured $7.5M in funding from Venrock and Hearst Interactive Media, a division of the Hearst Corporation. The funding will enable the development of new, innovative online video products and services for TurnHere customers, as well as enhanced tools for the growth and expansion of the TurnHere filmmaker network and in-house production team.

TurnHere has relationships with YellowPages.com, Citysearch and Superpages, among others and has emerged as the premier production company for the local market. When the company started it was doing direct sales to SMBs and was syndicating that content to third party video sites. When it decided to become a “production house” and leave the selling to existing channels the local part of its business started taking off.

SpotRunner recently acquired GlobeShooter, a local videographer and production network to be able to match TurnHere’s distributed custom production capability. Denver Multimedia and others offer similar services but aren’t quite as well known. As mentioned, Howcast is building this as well, as a supporting feature of its primary consumer business. There’s never been a better time to be a film student or independent filmmaker.

In the risk-adverse world of VC investing, this is one of the “lowest hanging fruit” opportunities imaginable. The interesting question is what “enhancements” or new products will TurnHere be developing? It already has reach into the UK and Europe.

DirectoryM Relaunches, Sans VC Money

Local ad platform/network DirectoryM has relaunched. Here’s the MediaPost piece on it:

DirectoryM pulls local business info from sources like Superpages, Ingenio and PriceGrabber, but they also accept direct feed submissions. Meanwhile, publisher partners sign up via the DirectoryM Web site, where they can customize the directories and content modules to blend in with their site’s existing color and navigation theme. Content providers who want syndication through DirectoryM also sign up on the site, and according to CEO Panos Bethanis, it’s the platform’s simplicity that has made it popular with companies like Jupiter Media.

What’s more interesting to me, however, is an article that was sent to me this morning in email about DirectoryM’s experience with VCs. From the piece (couldn’t find original source):

After raising $21 million in three rounds of funding, DirectoryM Inc. executives say they found themselves with a group of investors ready to give up on the company.

So, in March of last year, rather than calling it quits, the founders and employees bought the company back from its venture investors for $6 million – basically a total loss for venture capital firms BV Capital and Matrix Partners, according to co-founder and Chief Executive Panos Bethanis.”If you put that much in and are willing to sell, you’ve pretty much given up on everything,” Bethanis said.DirectoryM, which was founded in 2002 as an online business directory, plans to make its official re-launch on Monday with a new focus on local advertising.

This is starting to become something of a common story: business with opportunity, assets and even money in the bank is put up for sale or otherwise abandoned by VCs. There needs to be a better, alternative way of funding startups, especially in local.

VCs May Prop Up Startups in a Bad Economy

Whether we’re now in a recession technically or not is, literally, academic. The economy is not doing well in most sectors (save exports bolstered by a weak dollar). However, continuing VC investment may help soften the blow to the Internet or at least the startup segment of the Internet.

According to AP:

Although many experts believe another recession is imminent, venture capitalists say there is little reason to believe their investment pace will slacken this year.

In a show of confidence, venture capitalists raised $34.7 billion for future investments during 2007, a 9 percent increase from the previous year . . .

Internet startups also appear better positioned to weather any economic turbulence because the advertisers that generate most online profits appear likely to keep shifting their spending from television, print and radio to the Web even if there is a recession.

That latter point is somewhat debatable except for the largest or highest traffic sites. In addition, a climate of ongoing M&A activity may continue to provide money to Internet entrepreneurs despite a flagging economy. The final point is that in a bad economy there may not be many good places to put money so the Internet may benefit for that reason as well. 

Regardless, we’ll soon see how all this plays out and how the Internet is affected vis-a-vis traditional media.

SMB Display Ads Maker AdReady Grabs $10 Million

AdReady aims to make display advertising simple and accessible for SMBs. I got a demo of the product a few weeks back and I must say it is impressively simple and customizable.

The company needs to discover its advertiser “sweet spot” — that is, the segment of SMBs receptive to brand or quasi-brand advertising and willing to do self-service. Indeed, there’s the familar challenge of the sales channel issues; self provisioning is always a problem for this market. However, with the right segmentation approach there will be those who do come directly to the service.

There’s ad distribution on the back end, through Advertising.com, RightMedia and AdBrite as well.

The service doesn’t exactly compete with the AdMission platform but the models are similar. There’s also a way in which AdReady is an emerging Spot Runner competitor, as Spot Runner moves more onto the Internet. Video in general is a competitor of static display advertising. AdMission currently can accommodate video in its ad units, while AdReady can be expected to incorporate video in the relatively near future.

In all, the market is moving toward what might be called “actionable display advertising,” which combines branding elements with direct response. But getting most SMBs to recognize the value of branding, even when combined with direct response, is a challenge (though not impossible). The exception is video, which has high SMB demand. That’s why AdReady will likely be doing a big push to “white label” their product and go after existing SMB sales channels.

The company today announced funding of $10 million.

Andy Sack’s Local Recommendations

I spoke last week with Judy’s Book CEO Andy Sack about the decision to shutter the site and his reflections on the entire experience. We had a free-ranging conversation that was very lively and illuminating. But since I was in my car during the call, I’m just going to reproduce the highest level bullets.

After making the point that local is fundamentally challenging Sack explained that he thinks it was a mistake for Judy’s Book to go national as soon as it did. He and his management team felt compelled do so, however, because of perceived competitive pressure from InsiderPages, which was launching nationally.

Sack added that if he had to do it over he’d:

• Launch in a single market and gain critical mass before going national
• Launch with a narrow content focus: one category or just a few rather than trying to be comprehensive immediately
• Try to get into the “deal flow” (think travel or OpenTable) of local ad spending
• Have a long time horizon and tempered expectations accordingly

Along the lines of the final bullet, we discussed the common venture capital desire to invest and “get out” in 3-5 years with a 5x to 10x return. Sack and I both concluded that this was unrealistic and indeed maybe fundamentally incompatible with what it takes to succeed in local.

Sack said that the revamped Judy’s Book, which became a deals and coupons site, didn’t really have a chance to prove itself but that his investors felt the best decision was to close the site down (a decision that Sack now supports). Similarly the InsiderPages board made the decision to sell that site to Citysearch/IAC. Backfence, for its part, was unable to raise another round after exhausting its funding.

There will be exceptions where local sites get traction early and pay off, accordingly, for their VC investors. However, these examples raise the question for entrepreneurs of whether VCs should be involved in local at all given what might be called their “impatience.”

Recall my joke/formulation about Craigslist, which Newmark recently agreed with:

If Craigslist had taken [VC] investor money in the beginning it probably wouldn’t be around today because it would have had to make different choices.

Sack told me that he was available (until his next gig) to help companies in the local space that were looking for the benefit of his experience and perspective. If you want to reach him you can do so through his blog.

Steve Ballmer Fuels ‘Magical Thinking’

Microsoft CEO Steve Ballmer commented at Web 2.0 yesterday that he would buy 20 companies a year for the next five years at individual price tags of between $50 million and $1 billion. That makes 100 companies at up to $100 billion dollars.

VCs and entrepreneurs, who’ve harbored the fantasy that their efforts would be quickly rewarded by an acquisition, without actually having to worry about business models working, would seem to be justified in that mindset. Indeed, almost nobody is starting Internet companies today with the idea of actually running a business and making a profit over the long term — or even the near term. The idea of being around in 10 years (or even five) at the same company would be a joke to most folks in the industry.

(But see Craigslist and Where2GetIt as companies that have built value by plugging away over the course of a decade.)

Most entrepreneurs are self-consciously building companies to flip to larger players. By making public statements like Ballmer did yesterday, Microsoft is effectively fueling this kind of “magical thinking.”

Praized Goes from Blog to Startup

Sebastien Provencher, formerly of Yellow Pages Group in Canada, and writer of the Praized blog, has secured $1 million in funding to launch his local startup. I don’t know more about it than the funding and the discussion in the release:

“Praized is a social media company developing software that connects logs, social networks, and local search in ways never seen before, says CEO Harry Wakefield.” The company is currently operating in stealth mode and expects to launch its product in key target markets early next year. This investment is going to allow us to really grow this business”, he added.

“The Praized team has a focused local strategy for a growing niche market” says Tom Sweeney, General Partner at Garage Technology Ventures Canada. “This team truly understands local search and the growing social dynamics of the web.”

Sebastien is an astute observer of local and so I’m interested to learn more.