VC Partners Talk about O2O entrepreneurship: localization really not?

"Somolo" has become a hot word in the investment community over the past few years to describe the three trends of socialization, mobility and localization (social, mobile and local). Among them, social and mobile enterprises have achieved great success. What about the situation in which the localization business brings the investor benefits? Andreessen Horowitz partner Jeff Jordan, a VC company, recently wrote about his views on the start-up of a localized O2O business in the tech blog AllThingsD. Jeff is a board member of startups such as Airbnb,belly,fab,lookout and Pinterest. He also served as CEO and chairman of OpenTable, PayPal's chairman and general manager of ebay's North American business. Does localization really not work? It is clear that the successful listing of Facebook, LinkedIn and Twitter has made social trends seem obvious. With the popularity of smartphones and tablets, the flow of mobile terminals has exceeded the network traffic on the PC side. But because of the weak performance of the group buying site, the localized type of business has not been bullish since the end of last year. From my own observations, some localization companies have been rejected by a number of VCs, citing "we do not invest in localized types of companies." "However, I would say that localized start-ups are actually one of the best investments in the 2013." Many localized consumer-oriented Internet companies have been listed this year. A number of high-quality localization companies have also been listed, including Yelp, Zillow, Trulia and Angie "s list, since OpenTable opened the door to the listing of localization companies in 2009. Groupon's market performance this year is also remarkable, with its market capitalisation outpacing the 6 billion-dollar offer that Google tried to buy a few years ago. The "localization" I'm talking about here refers to the technology companies engaged in O2O (offline to offline) business. In general, they serve two markets: one is the offline local business and the other is online consumer services. They typically expand their businesses on a city-by-town basis, and they need to expand their local market share and earn revenue by selling a team of local small businesses. Obviously, the mobile side is very helpful to the localized business. The geographic positioning of smartphones means that the computing equipment we carry with us lets us know where we are. Take opnetable For example, users can let mobile apps help him look at the nearby restaurants to reserve a table. Localization business problems setting up a technology company with localized business is not easy, it has three characteristics: 1 requires a city to operate. It's not easy to be successful in a market, and when your model is validated, a lot of competitors can suddenly come out and play against you.City。 Competitors from other countries will also be able to complete the partition of their markets before you arrive. The local food delivery service is an example of a European copycat who has quietly launched a scramble for European markets as the distribution company GrubHub in the US. 2 need to develop the market online and on-line. At both ends of the market to develop the skills requirements are very different, offline need to promote the sales team, online needs for the consumer market marketing strategy. 3 The quality and quantity of the staff should be able to cope with thousands of offline merchants to deal with the complexity of the business process. For example, Groupon employs 11000 people, and Yelp has 2000 people, and the average annual contribution of the two employees is 200,000 and 100,000 dollars respectively. Therefore, local start-up enterprises in the market to promote the time will be longer and more investment. But the winners ' rewards are great, but successful companies reap the rewards of the market, although they are much more difficult to promote. This is a "winner take-all" nature of the industry, the leader will have a long-term majority of the market share: 1 The winning companies usually have a strong local network effect. I had the privilege of participating in OpenTable's IPO, and I found it difficult for other companies to catch OpenTable in a particular market after gaining the first advantage. For cooperative hotels, even if other scheduled services are free, it will continue to use OpenTable services. Since local consumers and restaurants have formed a large order network on the OpenTable, it makes it difficult for cooperative hotels to give up OpenTable services. After the listing of OpenTable, many similar services emerged, but were short-lived. 2 The scale advantage of the winning company is difficult to be surpassed by others. It is most important for O2O companies to complete contracts with local businesses. The market leader will soon have the largest sales force. Their experience accumulation and learning curve is faster than that of smaller competitors, so the efficiency of merchant contract and consumer marketing is much higher. New entrants are often at a disadvantage in size and efficiency, which is also a financial disadvantage. What the future star investors value from our research results, public investors are most concerned about the growth prospects of enterprises. The O2O companies most likely to become listed companies are: Uber, GrubHub, Seamless, Mindbody and ZocDoc. In addition, the rapid growth of the new generation of localization companies may be the future of the Stars, Homejoy, DogVacay, Lyft and Belly are among the representatives. We very much believe that localization technology companies still contain huge growth space and investment opportunities. I think that the winner-takes-all industry characteristics are in line with investors in the investment in the "competition moat" pursuit. Investors in the open market have cast their own votes on companies with Moats.