Three Social Networking Startups: RevCat, YourLocal, CollectorsQuest

I was a judge tonight at an event sponsored by the MIT Enterprise Forum-NY, presentations by three social networking companies. (Sponsor: Fish & Richardson P.C.) The other judges:

– Steve Brotman, Managing Director, Greenhill SAVP

– Jim Coleman, President & Certified Facilitator -The Alternative Board – Chelsea New York

– Russ Fein, Managing Director, Corporate Fuel Partners

– Lori Hoberman: (Moderator), Co-Chair, Corporate & Securities Group at Fish & Richardson P.C.

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Company 1: RevCat.com

Pitch: "RevCat is the creator of the Relationship Value Index (RVI), the first technology to enable employees to build and effectively use organizational networks. RVI provides a new approach to knowledge and contact management. It enables individuals and groups to navigate organizations guided by their performance objectives to effectively get the information, decisions and expertise necessary to meet their objectives. The solution includes software and consulting."

Jim Caruso, CEO:

2 year old firm.

1^st year in business was working with Honeywell Corp, with cross-section of their 100,000 employees.

Industry trends they’re riding:

– social networking expanding into corp. workflow

– organizational network analysis has identified clear ROI (e.g., Rob Cross at UVA)

Pain points:

– wasted time communicating expectations and needs

– uncertainty on how to prioritize the people who can help

– difficulty reaching someone who can help

– ineffective at asking someone to help you reach someone else

– frustration waiting for email/vmail response

Goal: RVI becomes the social networking standard used in business to drive individual effectiveness.

RVI measures: mutual benefit, cycle time, invested success, gain access, feedback, walk away, referral, meet objectives

Value proposition:

– Reuse and distribute expertise residing in informal networks (call it knowledge management upside down)

– Reduce costs related to ineffective use of people resources

– Identify faster ways to leverage colleagues to meet business objectives

Honeywell case study: employees didn’t know how to get things done, because of constant reorganization.

Fidelity case study: employees frustrated maneuvering across 40 business units in company.

Their goal is to be the standard measure for relationship value. Generating revenue thru software licensing.

Competitors and potential partners: contact management, social networking (Contact Network Corp, LinkedIn); Human Capital management (Softscape, Kenexa, Halogen); CRM (Salesforce);

RVI is different approach to business relationships. Real-time capture of knowledge and relationship strength.

Barriers to entry: have been at this 7 years.

Customers are typically large complex organizations. Raytheon, Credit Suisse, Pfizer, Dunkin Brands. 350,000 users right now.

MY FEEDBACK:

What I like:

good management team that worked together in the past

-real clients

Feedback on presentation

– should work with KM companies

– not clear how to use it day to day

My Concerns

– long sales cycle, because they have to sell to General Counsel, CTO, CEO

– I’m concerned about relatively little progress after so much time has passed

FEEDBACK FROM PANEL

Responses from Caruso

– they’re talking with some big consulting firms about white-labeling this. Have been in business 2 years.

– They approached some of the early adopters (Spoke, Visible Path, etc.) about being the corporate front end for them, but those conversations didn’t bear fruit.

– people are stingy about their relationships

– they mainly sell to CTOs

Responses from Audience

– why not target NGOs?

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Next Company: YourLocal.com

Pitch: "YourLocal.com is the first website that enables users to navigate their entire local experience. Featuring a wiki-enabled event guide, user-generated reviews, and the community-building tools of a social network, YourLocal.com produces abundant, dynamic content. At the same time, an individualized recommendations engine helps guide users through the "white noise" of events, and towards the events they’re most likely to enjoy."

Scott Stedman presenting

Scott Stedman and his brother are founders/owners of "The L Magazine", 102,000 circulation biweekly, largest NY tristate event guide. They cover both venues and events.

Events that you see will be customized for your particular interests. Will incorporate both user-generated revews and events.

Interface guide is modeled on Netflix.

Competitors:

EventMe.com, Bernardoslist.com, Upcoming, Yelp, down2night, whatsupNYC, renkoo.

None have recommendation engine. They don’t amalgamate user-generated reviews.

My feedback:

– very crowded space. Instead why not build "ntag for the social networking/dating space"? Help me meet the women at the party who meet my specs, who will be interested in me. No one’s done that well, and that’s very valuable. I’d pay for that.

Other feedback from panel:

– don’t say you want "5-8 employees"; it’s too wide a range

– don’t put a pre-money valuation, because someone may think it’s worth more.

– Clarify conflict between L Magazine and YourLocal.com . It’s better to just get investors in L Magazine as one entity, which owns YourLocal.com . What happens if you expand to Seattle and want to launch a local presence there?

– Go deeper on problems that current users have with their existing site and competitors.

Feedback from audience:

– partner with local weeklies in major cities to get their content

– no evidence in presentation of technology expertise

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Collectors Quest

Pitch: "Collectors Quest is a Broadband TV Network targeting the collectors community and advertisers seeking access to this high-value group. Collectors Quest combines a mix of high-quality broadband video, social networking and ecommerce to address a passionate community already online, that spends significant time and money on collecting interests."

Elizabeth Kressel, Founder & CEO

Consumers spend $100b annually for collectibles. 73m Americans are collectors, with an average of 2-3 collections. Over 10m people annually attend collector events.

3 prongs: content, commerce, community.

Very strong management team; 4 with experience in this sector, and 3 worked together previously

COO was founder of auctions.com .

Revenue model:

– targeted commerce. Margins 50-75% on collectible items (standard in this industry).

– Advertising. CPM of $10-$30 due to niche focus. Pre-roll ad rates of $25 but as high as $75 .

– Publishing

Entertaining and informative videos. No one else is offering this in this sector.

1-to-1 marketing in its purest form.

Revenues from UGC and community. Profiles are based on dating profiles. "Make me an offer" feature to provide CQ opportunity to get additional revenues. Use technology to make collecting easier.

"Collecting is all about bragging"—so it’s easy to get detailed demographic data

Milestones: secure call center, finalize inventory mgmt, website launched,

Partners; hearst, primedia, mbeckett, Today Show

Collectors clubs with 500K members have agreed to promote CQTV.

Competitors:

Very fragmented area.

Content: collecting sites, cable programmers, network programmers

Commerce: TV , internet auctions, other retail outlets

Have raised $400K to date, and seeking $3m in capital.

Process patent is in process

My feedback

– Great presentation, very professional. Best of the evening by a big margin.

– Raise more money

– Copy MyThings.com

eBay is 1.25% of the $100B/year in revenues in this area. This is very fragmented market. EBay started with collectors market but has since abandoned it.

Other panelists

– this is very viral

– what is your liability in case of fraud, given there’s extensive fraud in this market (e.g., signed baseball cards)? Answer: they’ll use the same guidelines as ebay.