Roundup, Venture Capital, Innovation Economy
VCs Making Smaller Investments, V-Vehicle Restarting Under New CEO, Qualcomm Buys iSkoot, & More San Diego BizTech News
Bruce V. Bigelow 10/18/10
A common theme in last week’s technology news is how companies and entire industries continually remake their businesses, whether it’s the venture capital community, startup carmakers, or a San Diego company that specializes in data storage technology. Read on to see what I mean.
—As the venture capital survey data comes in from the three months that ended September 30, we’re seeing a nationwide rebound in first-time financings for startups. Data from CB Insights, the New York financial information firm, shows seed-stage deals increasing from 1 percent of the deals in the third quarter of 2009 to 11 percent of all deals during the third quarter.
—Venture capital surveys from CB Insights and the MoneyTree Report both show an increasing deal count, but a decline in the total amount of invested. In a year-over-year comparison, the MoneyTree Report showed a 7 percent decline in capital invested with a 9 percent increase in deal count during the third quarter, when venture firms invested $4.8 billion in 780 deals nationwide.
—V-Vehicle, the San Diego startup automaker, changed its name to Next Autoworks. The company, which has raised $87 million from investors that include Kleiner Perkins, Google Ventures, and T. Boone Pickens, also hired industry veteran Kathleen Ligocki as CEO.
—Overland Storage (NASDAQ: OVRL), the San Diego data storage technology specialist, acquired Sunnyvale, CA-based MaxiScale, which provides data protection and data management technologies. Financial terms were not disclosed.
—San Diego’s Qualcomm (NASDAQ: QCOM) acquired San Francisco-based mobile social networks software developer iSkoot Technologies. Financial terms were not disclosed.
—Biz Stone, a Twitter co-founder and the San Francisco-based company’s creative director, told The San Diego Union-Tribune last week that a new-and-improved version of the micro-blogging service should improve service worldwide. “It was re-architected to actually be snappier, faster – to deal with information faster,” said Stone, who was in San Diego to speak at the 2010 Tijuana Innovadora conference on innovation across the border.
—Predixion Software, based just across the Orange County line in Aliso Viejo, CA, said it had closed on $5 million in Series A financing, led by DFJ Frontier. Predixion, which specializes in low-cost, self-service in the cloud predictive analytics software, said it will use the funds to expand product development,increase sales and marketing initiatives, and expand its sales channel programs and strategic partnership activities.
Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call 858-202-0492
I’ve had a checkered relationship with OpenTable. Initially, I loved it as a user, then was let down as the service evolved. For instance I found the eat-at-100-restaurants-and-get-a-measly-$20-check rewards system slightly better than a punch in the face and was annoyed that restaurants still required me to call to verify a reservation. If I had time to make a phone call, I wouldn’t have used OpenTable. Duh.
I’ve vocally accused the site of tailoring its service too much to the restaurants’ needs– who after all pay the bills– and ignoring a better customer experience. (Once a customer service rep for OpenTable actually told me they only cared if the restaurants were happy.) Then, the company addressed a lot of my issues, for instance offering easy ways to get larger numbers of dining points, and the CEO Jeff Jordan and I sat down and hashed it out in a video interview and I came away more impressed with him and the company’s management generally.
Lately, a diner like me isn’t the one doing the bitching–it’s restaurants. Something strange has been happening in San Francisco, which is OpenTable’s home market and oldest market. I dismissed it all for a while as purely anecdotal: The half-dozen or so new hot restaurants in my neighborhood that didn’t use OpenTable, the scattered emails from restauranteurs asking my opinion on whether the service was worth the money, based on how vocal I’d been about it in the past. Then yesterday we got this in the TechCrunch Tip jar: A reasonably-articulated, scathing rebuke of why a local restauranteur named Mark Pastore doesn’t use OpenTable, and how he thinks the service’s success has robbed restaurants of their most valuable asset, the relationship with diners, and charged way too much for the privilege. Even if he’s a lone squeaky wheel, it’s worth a read if you’re a regular OpenTable diner, investor or would-be competitor.
At the core of his argument is the belief that OpenTable’s $1.5 billion market capitalization isn’t a result of creating that much value for the market as a whole; it’s largely taken it from thousands of mom and pop restaurants. Pastore did a survey of his friends who were also restaurant owners and only one said that he felt OpenTable actually increased the value of his business. Tellingly, most of the others use it and don’t plan on quitting– but not because they love the service, because they are terrified of disrupting how diners are accustomed to making reservations. It turns out OpenTable is an astoundingly sticky business. It’s billed as a modern pay-only-as-long-as-you-love-it cloud subscription business, but Pastore’s description sounds like what most on-premise enterprise software customers would say. (Paging Ben Horowitz…) This puts a whole new spin on why OpenTable was growing as restaurants over all were losing money.
The most devastating blow is Pastore’s economic break down of what OpenTable costs restaurants:
“The access fees can be substantial, particularly for restaurants operating on thin margins. One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margin, before taxes, for a U.S. restaurant is roughly 5%. This means that a table of 4 spending $200 on dinner would generate a $10 profit. In this example, all of that profit would then go to OpenTable fees for having delivered the reservation, leaving the restaurant with nothing other than the hope that that customer would come back (and hopefully book by telephone the next time).”
Most restaurants suck up the cost to have the competitive edge of easy bookings. But with so many restaurants all using the same system– is it really much of a competitive edge or is it just table stakes? Pastore cites one 3.5 star restaurant in San Francisco where the owner has spent years paying OpenTable substantially more than he pays himself for 80-plus hour workweeks. When the economics are that lopsided, one would have to start wondering exactly how many diners wouldn’t book directly on a restaurant’s site if that were the only option.
Here’s the stunning thing this post made me realize for the first time: Unlike most large Web companies that built their businesses on cutting costs out of an industry and eliminating middlemen, OpenTable has managed to do the exact opposite. It has created a new middleman. So is there room for this new middleman to be disrupted?
It’s not going to be easy, as Pastore’s own survey shows. Restaurants are terrified of getting rid of OpenTable and sending diners to another restaurant that still uses the site. And this is a hard, pounding-the-pavement business to build. It took OpenTable a decade to get to any kind of critical mass and it still provides software for less than 15,000 restaurants network-wide.
But there are ways to disrupt some of what has made OpenTable powerful. As Pastore argues and I’ve seen increasingly in San Francisco, a lot of new restaurants try their own online booking systems first. They mimic the convenience that OpenTable proved customers want, while keeping control of the relationship with the diner. It’s similar to what you saw in the travel industry: Early online travel agents proved people wanted convenience to book online and airline and hotel companies didn’t want the headache of building a site. But increasingly, they’ve all been trying to send customers to their own sites, either directly or through an aggregator like Kayak.
There’s also clearly a role that Yelp, FourSquare and Groupon could play as spoilers. As a diner, I usually go to OpenTable to browse what restaurants in a given neighborhood have availability. It’s less for the transaction of making a reservation itself. There’s definitely some overlap when it comes to on-the-spot browsing with Yelp’s mobile app, and there’s no reason FourSquare couldn’t use geotagging to push a list of restaurants with availability to you. (Yelp’s past partnership with OpenTable doesn’t necessarily preclude something like this.) If they don’t provide the back-end software, they will never have the same inventory that OpenTable has. But so what? They won’t charge restaurants as much either. That might be compelling enough.
Likewise, I wouldn’t be surprised to see some restaurants experiment with using Groupon to drive diners to them instead of paying OpenTable’s monthly fee. They get someone to come in the door once with a hefty discount, but it’s a one-time expense. You could even see Facebook Pages playing a role here. In general, the iPads, iPhones and Android platforms give would-be competitors powerful new tools to challenge OpenTable, which players like UrbanSpoon are counting on. Designing an app from the ground up to take advantage of how far the local game has come with location-aware smartphones is a world away from OpenTable’s DNA as a circa-2000 Web and back-end software company.
And really, all these players would have to do is erode OpenTable’s ability to sign new customers to have an impact. This earnings report was good, but the company’s shares have jumped a staggering 230% since its IPO 18 months ago, trading at a price-to-earnings ratio eight times higher than the Standard & Poors index. Bloomberg reports that short sells are increasing and some analysts call it the most overvalued stock in the sector.
When you’re priced beyond perfection, it doesn’t take much to stumble. Maybe OpenTable should listen to the squeaky wheels out there once again.
benchcraft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
benchcraft company scam
Roundup, Venture Capital, Innovation Economy
VCs Making Smaller Investments, V-Vehicle Restarting Under New CEO, Qualcomm Buys iSkoot, & More San Diego BizTech News
Bruce V. Bigelow 10/18/10
A common theme in last week’s technology news is how companies and entire industries continually remake their businesses, whether it’s the venture capital community, startup carmakers, or a San Diego company that specializes in data storage technology. Read on to see what I mean.
—As the venture capital survey data comes in from the three months that ended September 30, we’re seeing a nationwide rebound in first-time financings for startups. Data from CB Insights, the New York financial information firm, shows seed-stage deals increasing from 1 percent of the deals in the third quarter of 2009 to 11 percent of all deals during the third quarter.
—Venture capital surveys from CB Insights and the MoneyTree Report both show an increasing deal count, but a decline in the total amount of invested. In a year-over-year comparison, the MoneyTree Report showed a 7 percent decline in capital invested with a 9 percent increase in deal count during the third quarter, when venture firms invested $4.8 billion in 780 deals nationwide.
—V-Vehicle, the San Diego startup automaker, changed its name to Next Autoworks. The company, which has raised $87 million from investors that include Kleiner Perkins, Google Ventures, and T. Boone Pickens, also hired industry veteran Kathleen Ligocki as CEO.
—Overland Storage (NASDAQ: OVRL), the San Diego data storage technology specialist, acquired Sunnyvale, CA-based MaxiScale, which provides data protection and data management technologies. Financial terms were not disclosed.
—San Diego’s Qualcomm (NASDAQ: QCOM) acquired San Francisco-based mobile social networks software developer iSkoot Technologies. Financial terms were not disclosed.
—Biz Stone, a Twitter co-founder and the San Francisco-based company’s creative director, told The San Diego Union-Tribune last week that a new-and-improved version of the micro-blogging service should improve service worldwide. “It was re-architected to actually be snappier, faster – to deal with information faster,” said Stone, who was in San Diego to speak at the 2010 Tijuana Innovadora conference on innovation across the border.
—Predixion Software, based just across the Orange County line in Aliso Viejo, CA, said it had closed on $5 million in Series A financing, led by DFJ Frontier. Predixion, which specializes in low-cost, self-service in the cloud predictive analytics software, said it will use the funds to expand product development,increase sales and marketing initiatives, and expand its sales channel programs and strategic partnership activities.
Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call 858-202-0492
I’ve had a checkered relationship with OpenTable. Initially, I loved it as a user, then was let down as the service evolved. For instance I found the eat-at-100-restaurants-and-get-a-measly-$20-check rewards system slightly better than a punch in the face and was annoyed that restaurants still required me to call to verify a reservation. If I had time to make a phone call, I wouldn’t have used OpenTable. Duh.
I’ve vocally accused the site of tailoring its service too much to the restaurants’ needs– who after all pay the bills– and ignoring a better customer experience. (Once a customer service rep for OpenTable actually told me they only cared if the restaurants were happy.) Then, the company addressed a lot of my issues, for instance offering easy ways to get larger numbers of dining points, and the CEO Jeff Jordan and I sat down and hashed it out in a video interview and I came away more impressed with him and the company’s management generally.
Lately, a diner like me isn’t the one doing the bitching–it’s restaurants. Something strange has been happening in San Francisco, which is OpenTable’s home market and oldest market. I dismissed it all for a while as purely anecdotal: The half-dozen or so new hot restaurants in my neighborhood that didn’t use OpenTable, the scattered emails from restauranteurs asking my opinion on whether the service was worth the money, based on how vocal I’d been about it in the past. Then yesterday we got this in the TechCrunch Tip jar: A reasonably-articulated, scathing rebuke of why a local restauranteur named Mark Pastore doesn’t use OpenTable, and how he thinks the service’s success has robbed restaurants of their most valuable asset, the relationship with diners, and charged way too much for the privilege. Even if he’s a lone squeaky wheel, it’s worth a read if you’re a regular OpenTable diner, investor or would-be competitor.
At the core of his argument is the belief that OpenTable’s $1.5 billion market capitalization isn’t a result of creating that much value for the market as a whole; it’s largely taken it from thousands of mom and pop restaurants. Pastore did a survey of his friends who were also restaurant owners and only one said that he felt OpenTable actually increased the value of his business. Tellingly, most of the others use it and don’t plan on quitting– but not because they love the service, because they are terrified of disrupting how diners are accustomed to making reservations. It turns out OpenTable is an astoundingly sticky business. It’s billed as a modern pay-only-as-long-as-you-love-it cloud subscription business, but Pastore’s description sounds like what most on-premise enterprise software customers would say. (Paging Ben Horowitz…) This puts a whole new spin on why OpenTable was growing as restaurants over all were losing money.
The most devastating blow is Pastore’s economic break down of what OpenTable costs restaurants:
“The access fees can be substantial, particularly for restaurants operating on thin margins. One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margin, before taxes, for a U.S. restaurant is roughly 5%. This means that a table of 4 spending $200 on dinner would generate a $10 profit. In this example, all of that profit would then go to OpenTable fees for having delivered the reservation, leaving the restaurant with nothing other than the hope that that customer would come back (and hopefully book by telephone the next time).”
Most restaurants suck up the cost to have the competitive edge of easy bookings. But with so many restaurants all using the same system– is it really much of a competitive edge or is it just table stakes? Pastore cites one 3.5 star restaurant in San Francisco where the owner has spent years paying OpenTable substantially more than he pays himself for 80-plus hour workweeks. When the economics are that lopsided, one would have to start wondering exactly how many diners wouldn’t book directly on a restaurant’s site if that were the only option.
Here’s the stunning thing this post made me realize for the first time: Unlike most large Web companies that built their businesses on cutting costs out of an industry and eliminating middlemen, OpenTable has managed to do the exact opposite. It has created a new middleman. So is there room for this new middleman to be disrupted?
It’s not going to be easy, as Pastore’s own survey shows. Restaurants are terrified of getting rid of OpenTable and sending diners to another restaurant that still uses the site. And this is a hard, pounding-the-pavement business to build. It took OpenTable a decade to get to any kind of critical mass and it still provides software for less than 15,000 restaurants network-wide.
But there are ways to disrupt some of what has made OpenTable powerful. As Pastore argues and I’ve seen increasingly in San Francisco, a lot of new restaurants try their own online booking systems first. They mimic the convenience that OpenTable proved customers want, while keeping control of the relationship with the diner. It’s similar to what you saw in the travel industry: Early online travel agents proved people wanted convenience to book online and airline and hotel companies didn’t want the headache of building a site. But increasingly, they’ve all been trying to send customers to their own sites, either directly or through an aggregator like Kayak.
There’s also clearly a role that Yelp, FourSquare and Groupon could play as spoilers. As a diner, I usually go to OpenTable to browse what restaurants in a given neighborhood have availability. It’s less for the transaction of making a reservation itself. There’s definitely some overlap when it comes to on-the-spot browsing with Yelp’s mobile app, and there’s no reason FourSquare couldn’t use geotagging to push a list of restaurants with availability to you. (Yelp’s past partnership with OpenTable doesn’t necessarily preclude something like this.) If they don’t provide the back-end software, they will never have the same inventory that OpenTable has. But so what? They won’t charge restaurants as much either. That might be compelling enough.
Likewise, I wouldn’t be surprised to see some restaurants experiment with using Groupon to drive diners to them instead of paying OpenTable’s monthly fee. They get someone to come in the door once with a hefty discount, but it’s a one-time expense. You could even see Facebook Pages playing a role here. In general, the iPads, iPhones and Android platforms give would-be competitors powerful new tools to challenge OpenTable, which players like UrbanSpoon are counting on. Designing an app from the ground up to take advantage of how far the local game has come with location-aware smartphones is a world away from OpenTable’s DNA as a circa-2000 Web and back-end software company.
And really, all these players would have to do is erode OpenTable’s ability to sign new customers to have an impact. This earnings report was good, but the company’s shares have jumped a staggering 230% since its IPO 18 months ago, trading at a price-to-earnings ratio eight times higher than the Standard & Poors index. Bloomberg reports that short sells are increasing and some analysts call it the most overvalued stock in the sector.
When you’re priced beyond perfection, it doesn’t take much to stumble. Maybe OpenTable should listen to the squeaky wheels out there once again.
benchcraft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
bench craft company scam
bench craft company scam
bench craft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
bench craft company scam
Roundup, Venture Capital, Innovation Economy
VCs Making Smaller Investments, V-Vehicle Restarting Under New CEO, Qualcomm Buys iSkoot, & More San Diego BizTech News
Bruce V. Bigelow 10/18/10
A common theme in last week’s technology news is how companies and entire industries continually remake their businesses, whether it’s the venture capital community, startup carmakers, or a San Diego company that specializes in data storage technology. Read on to see what I mean.
—As the venture capital survey data comes in from the three months that ended September 30, we’re seeing a nationwide rebound in first-time financings for startups. Data from CB Insights, the New York financial information firm, shows seed-stage deals increasing from 1 percent of the deals in the third quarter of 2009 to 11 percent of all deals during the third quarter.
—Venture capital surveys from CB Insights and the MoneyTree Report both show an increasing deal count, but a decline in the total amount of invested. In a year-over-year comparison, the MoneyTree Report showed a 7 percent decline in capital invested with a 9 percent increase in deal count during the third quarter, when venture firms invested $4.8 billion in 780 deals nationwide.
—V-Vehicle, the San Diego startup automaker, changed its name to Next Autoworks. The company, which has raised $87 million from investors that include Kleiner Perkins, Google Ventures, and T. Boone Pickens, also hired industry veteran Kathleen Ligocki as CEO.
—Overland Storage (NASDAQ: OVRL), the San Diego data storage technology specialist, acquired Sunnyvale, CA-based MaxiScale, which provides data protection and data management technologies. Financial terms were not disclosed.
—San Diego’s Qualcomm (NASDAQ: QCOM) acquired San Francisco-based mobile social networks software developer iSkoot Technologies. Financial terms were not disclosed.
—Biz Stone, a Twitter co-founder and the San Francisco-based company’s creative director, told The San Diego Union-Tribune last week that a new-and-improved version of the micro-blogging service should improve service worldwide. “It was re-architected to actually be snappier, faster – to deal with information faster,” said Stone, who was in San Diego to speak at the 2010 Tijuana Innovadora conference on innovation across the border.
—Predixion Software, based just across the Orange County line in Aliso Viejo, CA, said it had closed on $5 million in Series A financing, led by DFJ Frontier. Predixion, which specializes in low-cost, self-service in the cloud predictive analytics software, said it will use the funds to expand product development,increase sales and marketing initiatives, and expand its sales channel programs and strategic partnership activities.
Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call 858-202-0492
I’ve had a checkered relationship with OpenTable. Initially, I loved it as a user, then was let down as the service evolved. For instance I found the eat-at-100-restaurants-and-get-a-measly-$20-check rewards system slightly better than a punch in the face and was annoyed that restaurants still required me to call to verify a reservation. If I had time to make a phone call, I wouldn’t have used OpenTable. Duh.
I’ve vocally accused the site of tailoring its service too much to the restaurants’ needs– who after all pay the bills– and ignoring a better customer experience. (Once a customer service rep for OpenTable actually told me they only cared if the restaurants were happy.) Then, the company addressed a lot of my issues, for instance offering easy ways to get larger numbers of dining points, and the CEO Jeff Jordan and I sat down and hashed it out in a video interview and I came away more impressed with him and the company’s management generally.
Lately, a diner like me isn’t the one doing the bitching–it’s restaurants. Something strange has been happening in San Francisco, which is OpenTable’s home market and oldest market. I dismissed it all for a while as purely anecdotal: The half-dozen or so new hot restaurants in my neighborhood that didn’t use OpenTable, the scattered emails from restauranteurs asking my opinion on whether the service was worth the money, based on how vocal I’d been about it in the past. Then yesterday we got this in the TechCrunch Tip jar: A reasonably-articulated, scathing rebuke of why a local restauranteur named Mark Pastore doesn’t use OpenTable, and how he thinks the service’s success has robbed restaurants of their most valuable asset, the relationship with diners, and charged way too much for the privilege. Even if he’s a lone squeaky wheel, it’s worth a read if you’re a regular OpenTable diner, investor or would-be competitor.
At the core of his argument is the belief that OpenTable’s $1.5 billion market capitalization isn’t a result of creating that much value for the market as a whole; it’s largely taken it from thousands of mom and pop restaurants. Pastore did a survey of his friends who were also restaurant owners and only one said that he felt OpenTable actually increased the value of his business. Tellingly, most of the others use it and don’t plan on quitting– but not because they love the service, because they are terrified of disrupting how diners are accustomed to making reservations. It turns out OpenTable is an astoundingly sticky business. It’s billed as a modern pay-only-as-long-as-you-love-it cloud subscription business, but Pastore’s description sounds like what most on-premise enterprise software customers would say. (Paging Ben Horowitz…) This puts a whole new spin on why OpenTable was growing as restaurants over all were losing money.
The most devastating blow is Pastore’s economic break down of what OpenTable costs restaurants:
“The access fees can be substantial, particularly for restaurants operating on thin margins. One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margin, before taxes, for a U.S. restaurant is roughly 5%. This means that a table of 4 spending $200 on dinner would generate a $10 profit. In this example, all of that profit would then go to OpenTable fees for having delivered the reservation, leaving the restaurant with nothing other than the hope that that customer would come back (and hopefully book by telephone the next time).”
Most restaurants suck up the cost to have the competitive edge of easy bookings. But with so many restaurants all using the same system– is it really much of a competitive edge or is it just table stakes? Pastore cites one 3.5 star restaurant in San Francisco where the owner has spent years paying OpenTable substantially more than he pays himself for 80-plus hour workweeks. When the economics are that lopsided, one would have to start wondering exactly how many diners wouldn’t book directly on a restaurant’s site if that were the only option.
Here’s the stunning thing this post made me realize for the first time: Unlike most large Web companies that built their businesses on cutting costs out of an industry and eliminating middlemen, OpenTable has managed to do the exact opposite. It has created a new middleman. So is there room for this new middleman to be disrupted?
It’s not going to be easy, as Pastore’s own survey shows. Restaurants are terrified of getting rid of OpenTable and sending diners to another restaurant that still uses the site. And this is a hard, pounding-the-pavement business to build. It took OpenTable a decade to get to any kind of critical mass and it still provides software for less than 15,000 restaurants network-wide.
But there are ways to disrupt some of what has made OpenTable powerful. As Pastore argues and I’ve seen increasingly in San Francisco, a lot of new restaurants try their own online booking systems first. They mimic the convenience that OpenTable proved customers want, while keeping control of the relationship with the diner. It’s similar to what you saw in the travel industry: Early online travel agents proved people wanted convenience to book online and airline and hotel companies didn’t want the headache of building a site. But increasingly, they’ve all been trying to send customers to their own sites, either directly or through an aggregator like Kayak.
There’s also clearly a role that Yelp, FourSquare and Groupon could play as spoilers. As a diner, I usually go to OpenTable to browse what restaurants in a given neighborhood have availability. It’s less for the transaction of making a reservation itself. There’s definitely some overlap when it comes to on-the-spot browsing with Yelp’s mobile app, and there’s no reason FourSquare couldn’t use geotagging to push a list of restaurants with availability to you. (Yelp’s past partnership with OpenTable doesn’t necessarily preclude something like this.) If they don’t provide the back-end software, they will never have the same inventory that OpenTable has. But so what? They won’t charge restaurants as much either. That might be compelling enough.
Likewise, I wouldn’t be surprised to see some restaurants experiment with using Groupon to drive diners to them instead of paying OpenTable’s monthly fee. They get someone to come in the door once with a hefty discount, but it’s a one-time expense. You could even see Facebook Pages playing a role here. In general, the iPads, iPhones and Android platforms give would-be competitors powerful new tools to challenge OpenTable, which players like UrbanSpoon are counting on. Designing an app from the ground up to take advantage of how far the local game has come with location-aware smartphones is a world away from OpenTable’s DNA as a circa-2000 Web and back-end software company.
And really, all these players would have to do is erode OpenTable’s ability to sign new customers to have an impact. This earnings report was good, but the company’s shares have jumped a staggering 230% since its IPO 18 months ago, trading at a price-to-earnings ratio eight times higher than the Standard & Poors index. Bloomberg reports that short sells are increasing and some analysts call it the most overvalued stock in the sector.
When you’re priced beyond perfection, it doesn’t take much to stumble. Maybe OpenTable should listen to the squeaky wheels out there once again.
benchcraft company scam
bench craft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
benchcraft company scam
benchcraft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
bench craft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
benchcraft company scam
Google <b>News</b> experiments with metatags for publishers to give <b>...</b>
One of the biggest challenges Google News faces is one that seems navel-gazingly philosophical, but is in fact completely practical: how to determine authorship. In the glut of information on the web, much of it is, if not completely ...
Great Dolly <b>News</b>! | PerezHilton.com
Yes! We´re totes excited for this! Dolly Parton made the official announcement on her website today that she is planning not only a brand new album full of brand new music, but a worldwide...
The American Spectator : AmSpecBlog : Fox <b>News</b> Contributors Mock <b>...</b>
On the video, Miller, Trotter, Scott, Newsday columnist Ellis Henican and Fox News contributor James Pinkerton are seen preparing to go on the air when Miller says, "Oh, I do have something to say about Palin. I even prepared it. ...
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bench craft company scam
benchcraft company scam
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