Grayboxx was confident that it had constructed a better local search mousetrap. It didn’t have time to make its case to the public however — and joins the list of those that have taken a run at local without success. Now Grayboxx’s sale once again raises the question about the outlook for consumer startups in local more generally.
Certainly they can succeed, it would appear, in vertical segments. And Yelp, together with a few others, argue that there’s still an opportunity in local more broadly. But it’s likely the players left standing in local ultimately will be those that have the resources to invest and develop for the long term. And that largely precludes startups.
I’m curious to know what others think?
Screenwerk 
April 11, 2008 at 12:49 am
I think there is always room for a better mousetrap Greg. While the hurdles in local are significant I still think there is plenty of opportunity for small companies that have a well-conceived plan and can execute.
April 11, 2008 at 1:17 am
Well, I hope we don’t serve as a cautionary tale. I do think that you will hear about PreferenceScoring in the future now that BayAdvisor has chosen to run with it; they may structure some interesting partnerships that leverage the technology. If I have anything to offer though to those aspiring to innovations in local, it would be the importance of bridging a new model with the existing one. Enterprise software companies understand the importance of connecting with legacy systems. In consumer, end-users have mental models that have been formed through repeated use. Introducing a new model must be followed by extensive thinking on how the new model can be communicated in a way that extends the end-user’s understanding and expectations for local. The assumptions they have (in this case, with scoring being done through user-review) are hard-wired. Could grayboxx have done more to bridge PreferenceScoring and user review earlier on – and clearly communicated the differences? I think so.
But I think the problem remains in local that of the customer experience. SEO plays in local can be lucrative short-term, but ultimately won’t move the dial as far as holistically improving that experience. I think whoever can do so, and do it in a way that is crystal-clear to the end-user, stands to benefit significantly. My two cents.
April 11, 2008 at 11:06 am
Sales sales sales. That’s our perspective, at CitySquares, anyway. I don’t believe there can be any real measure of success unless a local search company (and hence a ‘business’) can actually sell into this market. To us, that’s the opportunity. There is a massive market in transition, a tectonic shift, if you will. I don’t believe that technology is the way to address it. At the end of the day it’s about one thing only – can you sell local advertising to these SMBs. Period.
April 11, 2008 at 12:15 pm
And the SMBs do know that “more leads are coming from the Internet.” Had a windows guy say that to me yesterday unsolicited.
April 14, 2008 at 8:57 am
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April 14, 2008 at 10:37 pm
Agree with Ben. If you can’t sell into SMBs cost effectively, you don’t have a “local startup”.
GrayBoxx had a very cool technology. It just didn’t cross the chasm.
Through the comment above, and a quick look at the site, they obviously ignored the potential of SEO to attract an audience.
Take a look at yellowbot. They are the opposite extreme and they’re attracting a crapload of traffic from SEO.
SEO might have had short/mid term benefits only, but it would have brought an audience that would have been impressed by GrayBoxx’s excellent algorithm.
I’m hopeful we see their algorithm leveraged in some already popular sites. On my blog, I even predicted that GrayBoxx would revolutionize local search. Obviously, that’s not going to happen. Hopefully, their technology survives and it can change things.
There desperately needs to be a better way than just “links” and “reviews” to figure out what local businesses are the best.
April 15, 2008 at 12:49 pm
They say the algorithm will live on. I know the strategy was to be a destination but that changed at some point. They didn’t have enough money to make the change work.
The problem with the approach was that there was little “context” around preference scoring and regular consumers aren’t going to do side-by-side comparisons with other local sites. With more time they might have built that context with community and other rich content.