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Simon Greenman
CEO ServiceMagic
Europe
London / Luxembourg
• Career highlights:• CEO, ServiceMagic Europe
• MD Online, European Directories
• Head of Digital, Dex Media & R.H. Donnelley
• Co-founded MapQuest.com
• Also held positions or consulted with Accenture, AOL, Charles Schwab, Merkel Direct Marketing.
• Investing:– Advisor and former Venture Partner
DN Capital
– Angel investor and director
20+ years of international local digital
management and investment
Where’s the money gone? The precipitous decline of the
yellow pages in just six years…
2006
• $12B revenue
• $6B ebitda
• 10x EV / EBITDAhttp://www.prnewswire.com/news-releases/worldwide-yellow-pages-revenues-surpass-31-billion-latest-simba-market-research-says-58546972.htmll various Kelsey research
2012
• $6B revenue
• $2B ebitda
• 1.75x EV / EBITDA
2000s
Online Directories
1990s
Print Directories
The past ten+ years consumers have moved to new online
directories and increasingly vertical directories and services
2000s
Marketing services agencies
1990s
Print Directories
SMEs have many new choices for their marketing needs…the rise of
the integrated digital marketing agencies.
2014 revenues of $544M, +10.5%
YoY
Operating income +$9M
GM 51%
2014 revenues of $475M, -8% YoY
Operating income - $45M
GM 43%
ReachLocal and Web.com are $0.5B revenue
marketing services companies, but little money
2013 $160M +22% YoY
revenues and -$13M operating income…2014
growth accelerating 30%+
Go Daddy is a billion dollar revenue company and Yodle is
likely $200M+. But still no profits.
2013 $1.1B +15% YoY
revenues and operating income of -$200M Vs -
$279M in ‘12
2014 revenues of $315, +28% YoY
Operating income -$12M vs -$33M
PY
GM 83%
2014 revenues of $378M, +62% YoY
Operating income -$9.2M vs -$19M
PY
GM 89%
So what about the new consumer directories? Are they just
about to starting make lots of money?
2014 H1 revenues £70M, 60%+ YoY
Operating income £16M
Operating margin 22%
HomeAdvisor is a $200M+ revenue business,
profitable and growing 20%+ YoY*2013 revenues of $190M, +18% YoY
Operating income $46M vs $37M PY
Operating margin 25%
But there are a few vertical starting to make serious money.
OpenTable has 25%+ margins and was acquired by Priceline.
2014 revenues £238M
Operating income £100M
Operating margin 42%
IAC Q4 ’14 earnings announcement
So who’s really making the money in local?
• In 2014 Google had total of $62B in revenue, growing 20% YoY
• Operating income of $16.5B
• Gross margin of 62%
• And how much of this is local?– Todd Rowe heads up Google’s $5B
reseller channel focused on SMBs across 25 countries
– So could argue they are making as much as $3B in SME profit globally
• And Google has minimal sales costs! Others pay for the sales channel.
• And don’t forget the yellow pages.
• Nor Facebook.
Good margin
lead generation
High margin
transacting verticals
High margin search &
directoryLow margin marketing
agencies
So how do you make money in local? Need scale…get
vertical, get the transaction and own the branded media
Vertical and
Transaction
Horizontal and No
Transaction
Don’t own
the
consumer
Own the
consumer
brand
“Picks &
Shovels” –
margin at
scale?
OpenTable and JustEat points to the future of where the
money is going…the “uberfication of the world”
Yesterday
Based on ppt from @schlaf and RRE Ventures
The value chain is being dis-intermediated and reassembled by the
on-demand economy
Tomorrow
Everything seems to being “uberfied” at the moment
Transportation, dining, delivery, events, home services, healthy
& beauty, food, travel…Everything On Demand
Steve Schlafman, Principal
Transportation Health & BeautyDining + Drinks
Delivery & Logistics
Food & BeverageHome Services
Travel / Hospitality
Events
The money is pouring into the On Demand Economy
(ODE)!
• “Instant, pervasive access to goods and services without the burden
of ownership or long-term commitment”
http://www.slideshare.net/ZachNoorani/2014-ode-report
Uber has raised $5.9B at a $40B+ valuation. Airbnb has
raised $0.8b at $13B valuation.
• These companies are only five years old but yet have massive international scale and valuations.
In 2013 $1B+ invested in car services alone. And in 2014
Uber raised $3B and in 2015 alone $1B.
http://www.slideshare.net/ZachNoorani/2014-ode-report
Home Services marketplaces are really hot…$100Ms
invested in new names…
• Thumbtack has raised $148,200,000 including Google Ventures. Why? Porch raised $100M.
And Serviz has raised $20M to go beyond the marketplace to
its own “fair price” network of tradesmen
HomeServices is being sliced and diced into verticals,
with the cleaning vertical raising $100M+
Handy has raised
$45,700,000 in four rounds
The ODE economy is happening not just in
America!
• UrbanMassage is offering massages brought to your home in London
• Many ODE companies in Germany – Quandoo just bought for $219M, Book a Tiger…
You will never have to leave your home again!
• Can book pretty much any local service or product!http://www.slideshare.net/ZachNoorani/2014-ode-report
So where’s the money going?
• The race is on for the On Demand Economy – first
mover advantage exists
• Google is concerned that the front door to local is no
longer its search, but the app (and Amazon)
• If you are going to make really good money, you
need to ensure you scale really fast…
– Get lots of investment!
– Get branded!
– Get into that transaction!