Back in the spring I wrote about Jared Fliesler, the 28-year-old wunderkind who’d been named general partner at venture capital firm Matix Partners. On Thursday, Fliesler will announce his first investment as a VC, and it’s in the “so crazy it just might work” category.
San Francisco-based Locality, as its name implies, helps users find information on merchants near them. CEO Jay Shek calls local search “one of the least mature sectors on the Internet.” He cites a statistic from Google that 43 percent of all online searches are seeking local data, yet he notes that most small businesses still don’t have websites.
“You still can’t find the exact prices for every oil change or hair salon in San Jose,” Shek said by way of example. At least, not until now.
Shek started 18 months ago by unveiling a searchable database of local merchants in San Francisco, New York and Chicago. Earlier this year, he expanded to 10 cities. And with Thursday’s Matrix-led infusion of $4.3 million, the company is taking the proverbial quantum leap forward — from 10 cities to 10,000. That’s not a typo.
How does Locality gather detailed information on merchants in so many places? Via a small army of independent “agents” who contact each business to gather the pertinent data: Hours of operation, address, services offered and prices charged. Most of those agents, Shek said, are based overseas, and most contact their target businesses over the phone. (He tried outsourcing the work to call centers but found they charged too much.)
“We can go into a metro (area) the size of Dallas and contact every business there in a couple of weeks,” Shek claimed. Other agents fact-check the data to make sure nobody’s uploading inaccurate information to pump up their compensation.
Say you’re looking for a nail salon; the site will tell you not just where to find one, but what they charge for everything from pedicures to paraffin dips. Locality pairs the results with merchant ratings from Yelp, to give additional context for buying decisions. And if you’re accessing the service via mobile device – which, Fliesler said, about 60 percent of users do – the map narrows the results to businesses closest to you.
I took Locality on a test drive of my neighborhood, and while it nailed all the dry cleaners I know of, it missed a number of auto repair shops and preschools. Shek hopes that as the site gains traction with users, more merchants will proactively upload their information. The carrot? Nearly 2 million consumers access the service every month, Shek said, even though he hasn’t spent a dime on marketing.
Those consumers don’t pay to access the service, and Shek admits he’s not focused yet on how to monetize all his data, although he’s got several ideas. They range from premium advertising for merchants to letting other companies market services to the small businesses in his vast database.
Shek launched the startup in early 2011 under the name Centzy; back then, the idea was simply to gather pricing data from local businesses. The name change reflects the fact that the service now offers more information than just pricing – and also, Fliesler says, because Locality is easier to spell and pronounce. He’s known Shek for years and advised the startup even before becoming a VC.
Prior to the Matrix round, Shek had landed a couple million dollars in seed funding from Cowboy Ventures, Founder Collective and Lightbank, the venture capital firm of Groupon CEO Eric Lefkosky. Lefkosky, as one might imagine, has been a useful sounding board: “For all of their faults,” Shek said, “what Groupon does very well is acquire small businesses” as customers. Fliesler, too, adds valuable expertise as the former head of user acquisition at Jack Dorsey’s Square, which helps small merchants accept credit cards.
Locality currently offers information on 60 kinds of services, but Shek aspires to add hundreds more. “Our goal,” he said, “is to make every service at every local business searchable online.”
screen grab courtesy of Locality