Remember how most companies don’t sell practically overnight for $1 billion and it actually takes years before a startup finds its “Aha!” moment and narrows in on a working business model? Yes, we have one of those stories today.
Fwix, which started out as a hyperlocal news aggregator, is metamorphosing into an enterprise-facing company called Radius that gives salespeople the tools and data they need to scout local businesses.
It’s a big bet. While Radius had some early success making in the “low millions” of dollars per year selling access to its content to media companies, its chief executive Darian Shirazi saw a much bigger market opportunity in targeting companies that sell services to small businesses.
“I’ve always wanted to build a large sustainable company and it turns out that this is very hard to do,” he said. Shirazi is somewhat known for being precociously involved in the early wave of Web 2.0 companies. He was 17 when he joined Facebook, but left two years later when his parents made him go to college. (Yes, really.) After leaving college, he had the urge to do something on his own and the idea for Fwix grew out of his traveling experiences.
“I was basically dying to think of how I could organize the web’s information around location,” he said. That turned into a hyperlocal news aggregator complete with an API for real-time local news. But the media industry — as us bloggers know way too well — is an extremely difficult, penny-pinching target market. Fwix remarkably had some success in spite of this, but it wasn’t a big enough market opportunity.
Now the new product takes all of the hyperlocal data Fwix used to pull together from Twitter, Facebook, Yelp, Localeze, Acxiom and CityGrid and turns it into a dashboard that a salesforce can use to keep tabs on successful local shops. If you look at a local business profile (see below), you’ll see news, tweets, reviews and events tied to the place. This data can also be fed into Salesforce, where companies can keep track of leads and follow-though on potential opportunities.
Shirazi says customers like daily deals sites are willing to pay for this because they need to understand which local businesses are actually popular with the community. ”You have to try to treat the business like a creditor would,” he said. “You have to go after businesses that are doing well.”
Discovering this opportunity wasn’t actually that difficult, he added. Several customers, in fact, kept asking for a product that fed location data into Salesforce. The hard part was deciding to sunset the company’s other products to focus entirely on this problem.
Shirazi says his clients now include companies that have about 40,000 salespeople between them and that the majority of these employees should be on Radius by year-end. ”We’ve only had the product operational for two months and we’ve had customers go from trial into full deployment,” he said. “We know it’s working.”
Shirazi says there are 10 million people who sell to small businesses in the U.S. and even if he grabs a small slice of that market by charging $39 per month per seat, it’s a billion dollar opportunity. He says the Radius’ main competitor Dun & Bradstreet doesn’t provide all of this context from user-generated content sites. And for the record, Dun & Bradstreet has a $3.7 billion market capitalization, so yes, this is a bigger opportunity.
He says that what Radius does is a much harder technical problem to solve than it appears at surface-level. A business like San Francisco’s Hog & Rocks might be called “Hog and Rocks” in one directory but “Hog & Rocks” in another. Or there might be several coffee shops called “Java Cafe” in one city.
“We have to go and correlate all the data. The hardest part of the problem isn’t the data collection. It’s the matching,” he said.
Shirazi said all of Fwix’s employees stayed on with the company through the transition process and that he’s just hired his 20th employee. The company has raised $6.75 million in funding from Comcast Ventures and BlueRun Ventures.
“I’ve made a lot of mistakes. But that’s how you have to be as an entrepreneur,” he said. “As long as you keep trying, you will eventually stumble upon something that works.”