Wednesday, September 28, 2011

Thoughts on Centzy from the First ER Accelerator Demo Day #ERA1

(Note: This was supposed to be my thoughts on all the startups presenting , but I got lazy so it's only my thoughts on Centzy, the first company to present. What can I say, there are advantages to going first.)

Last Friday was the first ever Entrepreneurs Roundtable Demo Day, and I had the honor of watching a bunch of great startups demo and meeting a lot of fantastic folk from across the NY tech ecosystem. Anything in quotes is from the description of the company in the event program or something they said during their presentation.  This post includes exactly zero outside research.

1. Centzy

Overview: Centzy's is described in the event program as "a comparison shopping engine for local service."  That's a lot of buzzwords, so I prefer the way they describe themselves on their web page: "Find prices and ratings for every service in your neighborhood."  Centzy focuses on services costing <$100, or what they call "everyday services."

Apparently, only 25% of local services businesses post their prices online, and other local services such as Yelp, Google Place, etc. only post cost by crowd-sourced category (e.g. $, $$, $$$, etc.), if at all.  The consumer is left to the subjective, vague judgment of the crowd, or to making phone call after phone call to do any sort of price comparison.

  • This is obviously a huge market. I don't remember the latest quote for the size of the local services market but I think it's approximately $7 gazillion.  And there are, you know, a couple of small companies targeting this space.
  • I'm sure someone else is trying to collect local price data, but it's a big enough market for multiple startups to exit at good prices, and none of the big players seem to have this feature.
  • They are explicitly targeting women as their primary users. I can't stress how unusual and insightful this is. All the data shows that women overindex on practically every measure of social and digital media, yet the predominantly male founders tend to consciously or unconsciously target men (Whitney Hess has a lot of good thoughts about this, although the golden paragraph is buried in the middle of this post).
  • If my memory serves me they have a strong team, and the CEO gets bonus points for being a UPenn alum and for having degrees in Computer Science and Business :-)
  • What is their cost per business for acquiring - and maintaining - accurate price data?
  • What are their user acquisition costs?
  • Centzy claims that you can make an appointment right from your app, but it wasn't clear how they do this or if it was implemented yet.  They could get a cut of each sale if they could integrate with the businesses, but that will be a challenge that could require a huge sales force and some technological challenges. SeamlessWeb had to go through this with restaurants, but restaurants at least have screen-based POS systems. Services-based local businesses tend to have a simple credit-card swipe machine, or worse yet could be cash only.
  • Combining the previous points, can they get enough lifetime gross margin from each local business to overcome the acquisition/maintenance costs?
Conclusion: Like but need to dig into the execution.

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