(Buy­ing) power in num­bers

Startup FanForce rid­ing the resur­gent wave of on­line group buy­ing

Austin American-Statesman - - TECH MONDAY - BRIAN GAAR

Group buy­ing, the con­cept of on­line shop­pers band­ing to­gether to com­mand dis­counts, is all the rage. Again.

Af­ter crash­ing with the dot-com bust, the once-hot idea has been res­ur­rected. Sites are pop­ping up in ev­ery ma­jor city. Hun­dreds of mil­lions in ven­ture cap­i­tal is pour­ing in. In­dus­try leader Groupon is val­ued at more than $1 bil­lion, by some es­ti­mates.

And an Austin com­pany is plan­ning to take the con­cept to an even big­ger au­di­ence.

The com­pany, FanForce, launched at South by South­west this year. Its founders pre­vi­ously worked at Austin-based e-mail ar­chiv­ing com­pany Mes­sageOne, which Dell Inc. acquired in 2008. Af­ter the Dell pur­chase, some Mes­sageOne ex­ec­u­tives be­came in­ter­ested in the trac­tion that group buy­ing sites such as Groupon and Liv­ingSo­cial were get­ting, said Samy Aboel-Nil, a FanForce founder.

“The more we looked at it, the more we re­al­ized that the horse was out of the sta­ble,” he said.

But FanForce wasn’t cre­ated as a deal site. In­stead, it pro­vides the technology to en­able any­one to of­fer group buy­ing on their own site, and splits the rev­enues.

“Our ap­proach was, let’s not be a deal site — let’s be an arms bro­ker, if you will,” Aboel-Nil said.

Aboel-Nil’s com­pany is now poised to bring its technology to a wider au­di­ence, af­ter Fan- Force was re­cently pur­chased by the Seat­tle-based deal site Tippr.com. As part of the merger, FanForce founders joined Tippr’s man­age­ment team, in­clud­ing Aboel-Nil, who is now Tippr’s pres­i­dent and chief op­er­at­ing of­fi­cer.

And though FanForce’s technology now pow­ers Tippr.com, that’s just a small part of the busi­ness, Aboel-Nil said.

“This is a show­case; this is where we show off our technology,” he said. “But the real growth is, any­body with a big au­di­ence can launch a deal site.”

One of those sites is the pop­u­lar blog, “365 Things To Do in Austin,” which was started this year by Austin real es­tate agent Kristy Owen.

Owen’s blog (http://365thingsaustin.com) gives

read­ers a daily idea of some­thing to do around town, di­rect­ing them to lo­cal spots such as Stubb’s, West­gate Lanes and Stunt Ranch Paint­ball.

The blog took off once she im­ported it to Face­book — it now has more than 97,000 fans.

In March, Owen part­nered with FanForce and be­gan run­ning deals on her site — deals that were paired with what­ever res­tau­rant or venue she’s pro­mot­ing.

“I never ex­pected to make money, but it’s funny how life works out,” said Owen, a Hous­ton na­tive and Uni­ver­sity of Texas grad­u­ate.

Not that she’s plan­ning to quit her day job.

“Ev­ery­one thinks the blog has helped my real es­tate ca­reer tremen­dously,” Owen said. “If I was a travel agent, I’d be over­flow­ing with busi­ness.”

Those kinds of suc­cess sto­ries were the holy grail in the early days of group buy­ing. But the con­cept flamed out in the dot-com bust, most no­tably with the fail­ure of the deal site Mer­cata al­most 10 years ago.

Ul­ti­mately, group buy­ing was ahead of its time, Aboel-Nil said. Peo­ple are now much more com­fort­able mak­ing pur­chases on­line, he said. And with the ad­vent of so­cial net­work­ing, bar­gains can now be ad­ver­tised through friends lists and on Twit­ter.

In the wake of Mer­cata’s fail­ure, Tippr CEO and Seat­tle en­tre­pre­neur Martin Tobias acquired a port­fo­lio of group buy­ing pa­tents from the com­pany.

FanForce’s merger with Tippr made sense, AboelNil said, be­cause FanForce pro­vided the technology and Tobias pro­vided the pa­tents and a brand name. “We didn’t do a lot of things he did, and vice versa,” AboelNil said.

Tobias said he was in­tro­duced to the FanForce team by a com­mon in­vestor with RRE Ven­tures who had put money into Mes­sageOne and one of Tobias’ com­pa­nies.

“The more we talked, the more it was clear that there was a su­per-good align­ment of in­ter­est and what we needed and what they needed,” Tobias said.

Un­like its com­peti­tors, Tippr man­ages a net­work of pub­lish­ers in ad­di­tion to its own site. Sites like Groupon aren’t in­ter­ested in en­abling oth­ers to do group buy­ing, Tobias said.

But in the long run, the big­ger op­por­tu­nity is “to power ev­ery­one else with this new technology,” he said.

As an ex­am­ple, he pointed to search en­gine Ya­hoo, an early mar­ket leader that ul­ti­mately de­cided, ac­cord­ing to Tobias, that its pri­mary value was in its own brand.

“And now Google’s 20 times big­ger than Ya­hoo be­cause they’re en­abling ev­ery­body else in the world with ad technology and search technology,” he said.

Aboel-Nil and his team will stay in Austin, along with soft­ware en­gi­neer­ing op­er­a­tions. Tippr’s sales and mar­ket­ing will be based in Seat­tle, he said. In to­tal, the com­pany has about 30 em­ploy­ees, with nine in Austin.

The com­pany is on tar­get to dou­ble its gross rev­enue ev­ery month, Aboel-Nil said.

Tippr’s ul­ti­mate goal isn’t to try and beat out the Groupons and Liv­ingSo­cials of the world, he said. Those are here to stay.

But where Tippr can make an im­pact is by bring­ing group buy­ing to niche sites — and tar­get deals based on a site’s par­tic­u­lar de­mo­graph­ics.

“That’s a big mar­ket. And there’s a lot of them,” AboelNil said.

Ralph Bar­rera

From left, John Whit­marsh, Dane Knecht, Jor­dan McCoy, Isaac Specter, Paul Borde­lon and Samy Aboel-Nil of Austin’s FanForce.com, which was re­cently acquired by Tippr.com. Ac­cord­ing to Aboel-Nil, FanForce’s mis­sion is not to be a deal site, but rather ‘an arms bro­ker, if you will.’

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.