Adventure Capitalist

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Archive for Cool Companies

RepairPal hits accelerator with new $4m raise

December 17, 2009 at 2:33 pm · Filed under Commentary, Cool Companies, Starting up..., Trends and tagged: , ,

I wanted to take a quick moment today to congratulate RepairPal and its indefatigable CEO David Sturtz on news of the company’s recent $4m funding, led by new investor Tugboat Ventures and some prominent angels. David is a longtime friend – he and I having shared an office some years ago at a technology-focused investment bank – and I have had the pleasure of watching RepairPal take shape from its earliest and humblest origins to the industry leading company it is today. Watching that maturation has been a rewarding experience and there have been a number of “teachable moments” – for both of us.

Virtually all early stage companies evolve dramatically as they add talent, sharpen their focus, and learn things about their respective markets and customers. Some become almost unrecognizable as they adapt their businesses to address market realities. Others still hew closely to the original idea but learn to make adjustments around how and where they choose to compete in their ecosystems. What has impressed me about David and his team is how they have held firm to their original hypotheses about their market, how they invested sufficient time and energy to prove (or disprove) those hypotheses, and how they have always sought to apply new insights and revelations in a way that the business has been able to leverage.

RepairPal, for the uninitiated, provides accurate auto repair and maintenance information for almost all passenger vehicles within every zip code in the country. The company has built patent-pending technology from a team of factory-trained and ASE-certified technicians, which generates more than 70 billion unique RepairPrice Estimates. It also has the most comprehensive directory of auto repair facilities in the U.S. and a proprietary database of each model’s common problems. [faulty timing chains, anyone?]. The idea, simply enough, is to be able to see the expected cost of a typical repair and then see all the local shops that can perform that repair, along with appropriate reviews and other content.

RepairPal is an attractive business on a variety of levels, but I am most excited by how the company is cleverly applying a host of new web and database technologies to remove the opacity that effects much of the $180 Billion auto repair market. However, unlike many other B2C and B2B web businesses of the past, RepairPal is delivering this new transparency without necessarily pitting repair shops against one another or enforcing price compression that can have the effect of undermining the participation of shops on the network. Bringing transparency to an infamously opaque and perplexing industry is not a simple task. Too many other web businesses that have sought to create this kind of ‘marketplace function’ in their respective industries made the mistake of going after quick and easy revenue by seeking to lock up service providers before they fully developed a product that was truly compelling. Too often the result has been an adverse selection problem whereby lower quality providers (dentists, contractors, plumbers, etc) are disproportionately represented while higher quality providers stay away — the logic being that higher quality providers don’t seem to require the additional business or marketing opportunities that inclusion in such marketplaces can sometimes provide.

I believe David and his team succeed because they chose to focus first and foremost on building a robust price estimating engine that drew users to the site and great early reviews by reputable auto authorities. In turn, those usage metrics organically created a network effect whereby shops felt compelled to be included in the RepairPal network. Solid, reputable strategic partners have followed closely behind and become part of the RepairPal network.

Kudos to the RepairPal team. Keep up the great work.

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Gowalla, Foursquare and the Location-Based Services boomlet

December 9, 2009 at 3:30 pm · Filed under Commentary, Cool Companies, Trends and tagged: , , , ,

TechCrunch reported today on the new $8.4mm Series B round for Gowalla led by our friends at Greylock Partners. This announcement comes on the heels of recent news that Gowalla competitor Foursquare pulled in $1.4mm shortly after its much-publicized appearance at the SXSW conference.

Regular readers of this space may recall earlier pieces in Adventure Capitalist on the broad Location-Based Services (LBS) space and my bullishness on the emerging sector. In 2006, my firm, Citron Capital, was involved in a promising LBS venture, Open Planet, backed by the team that founded GoCar Tours, that was focused on the travel and tourism segment. The company developed a robust tour creation and delivery platform that enabled consumers to enjoy customized tours on their GPS-enabled cellphones virtually anywhere in the world, guided by GPS waypoints linked to the content. The experience was similar to that of a very robust navigation system in a top-line vehicle. The key difference was that instead of receiving mundane driving directions or locations of nearby bank ATMs or gas stations, the consumer would get the kind of rich content you’d expect from a good travel guide like Frommer’s or Fodor’s tailored to the route the consumer chose, and based upon preferences selected by the user. Because the content was delivered via GPS-enabled phone, the “tour” could be experienced in any number of ways – on foot, in a vehicle, on a bicycle, etc. The user would select the length of the tour, the route, their interests and preferences, and the software would create the tour, pulling together bits of content from a massive database of content linked to GPS-waypoints, and deliver it to the user’s cellphone. The preferences were so fine-tuned that a husband and wife could feasibly walk down the same streets in Paris and listen to entirely different tours. He would get content that interested him (sports, Renaissance literature, military history), while she received content related to her interests (say, music, sculpture, culinary, etc.)

The announcements on Gowalla and Foursquare and the attention they have received only serve to underscore how hot the LBS space has become. We wish them well and look forward to additional entrants to a sector that has long been bandied about as a “next big thing.” Unlike a lot of “next big things,” however, LBS actually looks like it’s poised to live up to its enormous potential.

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Social Networking: Let’s Get Vertical

November 11, 2009 at 6:19 pm · Filed under Cool Companies, Trends and tagged: , , ,

Apologies to Olivia Newton-John  and her bandana might be in order here for taking such license with this post’s title, but I’ve been getting pretty excited–nay, worked up–about the evolution of the broad social networking/social media meme in the past year. Ever since the promise of social networking platforms began to bear fruit with the growth of MySpace and its followers, a nagging issue among investors in the space has been around (a) long-term, sustainable monetization of the social web and related platforms; and, (b) stickiness. Some time back I took issue in a post with a then-$15B valuation for Facebook imputed by a Microsoft investment and pointed out some of my rationale for why that lofty valuation, at least at that time, seemed wholly unhinged to reality. Yes, I took some flack. That valuation has now floated down to a more palatable $10B range based upon more recent financings and other matters, but the arguments made in that post related to my concerns about long-term utility of most social networking platforms remain fairly relevant today.

Rather than rehash those arguments here, let me point to a company that I suspect might best represent the direction of where a good piece of what we call the social web is actually going–namely, vertically. Briefly, Citron Capital portfolio company Athleon is a web-based team management platform that delivers a suite of elite sports team management applications, previously reserved for professional teams, to the mass market of coaches. These coaches manage some 535,000 high school sports teams and more than 2 million club, youth and intramural teams across the country. Not included in that number are the tens of thousands of junior- and full-time college sports programs that don’t have the budgets of Big Conference universities and, hence, can’t avail themselves of the many point solutions offered to NCAA and professional teams.

Like many start-ups nibbling at the margins of social media, Athleon began life as a social communications platform of sorts focused upon the affinity group of prep school athletes. The usual suite of applications around messaging, calendaring, pix and postings followed. As the applications rolled out by the development team became more robust and customized to the needs of amateur and prep sports teams, however, the market began to take notice. Athleon had begun to win the ‘value’ argument and, in so doing, win over the toughest and most critical decision maker in its ecosystem–namely, coaches.

While we are very excited with what Athleon has built and with the clear value proposition that they are delivering to their users–better communication, integration, greater time efficiency for coaches, cost-savings, information and media sharing– that all lead to improved team performance on the field, we are also excited about the impact that these solutions will have on the greater social web. Our view is that vertical markets have unique and idiosyncratic needs that broad-based social networking platforms are ill-suited to address. Athleon founders Brent Lamphier and Ryan Kosai have built a potentially game-changing company at the edge of a new wave of social media platforms that we feel has tremendous promise and we are privileged that they have invited us to take this ride with them.

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