Startup RedBeacon, a self-described “Open Table for service businesses,” has won TechCrunch 50’s top prize and $50,000. I wasn’t at TC50 but I watched the demo pitch on video. RedBeacon is the just the latest startup to take aim at the massive local services segment. The demo was elegant and the theory behind the site makes lots of sense.
There’s just one fairly major problem: execution in the real world.
One can imagine the VC meetings and the pitch: “No one has yet to create an Open Table for the millions of local service businesses in the $14 billion yellow pages industry.” In fact there are a number of startups that have come before and have tried or are still trying to do some version of that very thing. They include (but aren’t limited to): BookingAngel, Bookfresh, Genbook, Libersy and a few others.
If we open the aperture a bit wider there are many lead generation sites and tools for local service businesses, ServiceMagic most visibly among them.
I’ve got nothing against RedBeacon and wish them well. But they will find, like many others before them, that the local space is much much harder to crack than it appears from a distance. There are many failed startups in local. In most cases they failed because they didn’t realize how tough it would be to get businesses to advertise or sign up.
The rest of this post is on SEL.
Screenwerk 
September 16, 2009 at 1:42 pm
I also watched the RedBeacon TechCrunch 50 video as well as the other “local” focused start-ups and it seems like deja vu all over again. Red Beacon probably has a chance with the technically sophisticated SOHO businesses and part-time businesses (stay-at-home Moms/Dads, real estate agents – who can do something else in between appointments etc). I believe this is the same group that initially supported Adwords back in the day.
Hitting the mainstream small business will be the mountain climbing struggle you described without some sort of feet-on-the street catalyst and even then, those of us who have toiled for years in local know all too well the challenges. I hope RedBeacon has some local subject matter experts on their advisory board.
My advice would be to initially steer away from the ServiceMagic direction and look to reach those local businesses that are “under the radar” or “out of the minimum spend budget” of most other traditional lead gen advertising vehicles.
Would be interesting to see a mashup of RedBeacon & Yext!
September 16, 2009 at 9:09 pm
I spent some time with the team and they are passionate and smart.
While suprised by the pick by TechCrunch, I wish these guys luck.
It is always amazing how new companies don’t go after the core issues as core issues, building local density, building consumer traffic, and building massive merchant adoption. Without addressing these interconnected chicken and egg issues, things look like the same approaches to a very valuable but very tough problem
September 16, 2009 at 11:52 pm
Hi Greg,
great piece finished over at SEL – should be required reading for anyone thinking about the selling web services to local businesses. You’ve seen enough of these firms fail to meet their stated goals – what are the standout companies that have succeeded in your opinion? What did they do differently that enabled them to engage local business people?
I’m trying to think of recent, new technologies/ services that small businesses adopted relatively quickly – the mobile phone springs to mind. It didn’t take much cajoling for small businesses to realise the value of having a mobile phone.
Of course we could all be flogging a dead horse – maybe there’s no value in local web services for small businesses. 🙂
Clearly there is value – so can this problem be simplistically boiled down to a communication problem?
Cheers
September 17, 2009 at 4:40 am
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September 17, 2009 at 9:13 am
Yes, it would be good to focus on successes. Yelp is a success, ServiceMagic is a success, MerchantCircle has become a success. Some of the local B2B plays have been successful (VoiceStar, Ingenio, etc.).
September 26, 2009 at 5:19 pm
Is Yelp a success with SMBs or consumers? I am seeing alot of controversies with merchant complaint about Yelp.
MerchantCircle gained traction with controversial robocalls to merchants with messages claiming that the merchants had negative reviews online. Not exactly white hat marketing.
September 27, 2009 at 2:00 pm
Yelp’s success with consumers has been greater than with paying advertisers to date, no question. But I’m sure Yelp’s doing reasonably well on the merchant side too.
October 20, 2009 at 4:30 pm
[…] in SF Bay By Greg Sterling RedBeacon, “OpenTable for local services,” which won the TechCrunch50 top prize, has formally launched in the SF Bay […]
June 4, 2010 at 8:19 pm
[…] had created an elegant platform but were naive about the small business market. Here’s what I wrote last year: I’ve got nothing against RedBeacon and wish them well. But they will find, like many […]