Bidzy, a new platform for connecting local services businesses with customers who need the service they offer in the next few hours, is launching at Disrupt NY 2013 today. Like the best ideas, Bidzy’s premise is simple: allow the customer to specify exactly what they want and the amount they are willing to pay and then let the individual businesses decide if they’re happy to take on a spot of last-minute work on those terms. Job done. Or, rather, credit card charged.
Bidzy’s platform sits in the middle, connecting the right customers to the right local services and holding payment until the work is completed – much like TaskRabbit hooks up consumers with time/skills to offer to other consumers (c2c) who have a task that needs doing. Except Bidzy’s focus is solely c2b – with its twist being that it allows customers to specify what they’re willing to pay.
“I actually don’t think there is anybody else who is allowing customers to name their own price,” says co-founder Dave Thawley, when asked about Bidzy’s competitors. “Or to put a credit card behind their bid… Bidzy is actually reaching out to the merchants on customers’ behalf, saying ‘hey are you free at two o’clock today, are you willing to cut my hair for $35?’ So we feel like we’re the first company to put the equation that way in the personal services space.”
There’s undoubtedly some crossover between Bidzy and Zaarly but Thawley argues that’s “more of a traditional storefront business versus the kind of marketplace that we are today.” Other rivals he cites are Craigslist and “vertical-specific online booking tools” – but, in the latter’s case, he points out that merchants have to provide availability data, something Bidzy does not require them to do.
The main knot Bidzy is trying to work out of the local business ecosystem is the amount of time and sweat it can take consumers to track down a service that suits, especially if they have a last-minute need for it — whether it’s a back massage after a sports injury, a quick haircut when a work meeting is cancelled, or an overlooked oil change before heading off on a road trip. Or a dog walker when you’re presenting on stage at Disrupt.
The idea for Bidzy was sparked after just such an incident. “One of the reasons why we chose to do the service category was based on personal experience where I had been out kite boarding in the day, hurt my back and it was 8PM,” says Thawley. “I was trying to find a massage studio to give me a back massage and I ended up having to call about 20 merchants before I finally found somebody.
Instead of a customer with a last-minute service requirement wasting time trying to track down a business that can fit them in, Bidzy’s platform lets them broadcast a request to relevant businesses in their area. All they have to do is wait for a merchant to accept their bid and the appointment is booked and paid for. For the consumer it’s a low hassle way of ticking tough-to-schedule items off a to-do list.
To make a Bidzy bid, a consumer enters five criteria: the category of service they’re looking for; how far they’re willing to travel; the time they have available for an appointment; the star rating of the business they want to use; and how much they are willing to pay. At launch, Bidzy is using an amalgamation of public-review data to generate its own star rating for businesses, but, as consumers conduct transactions through the platform, it will be able to feed its own data in.
Once the consumer’s bid is submitted, merchants who meet the customer’s requirements are pinged by Bidzy — and each one can decide if it is happy to accept the customer on their terms, with no obligation to do so. The first to accept gets the business. Bidzy will also be able to show customer data to merchants to help them make a decision on whether to accept a bid – such as how many bids the customer has submitted before, and the star ratings they have left.
Bidzy’s founders are keen to point out that, unlike daily deals companies like Groupon – which cast a long and rather chilling shadow over the local services space with their deal-driven customer acquisition model — Bidzy does not place margin-battering requirements on businesses to accept hundreds of customers at a particular offer price. Local merchants with modest means are able to choose to accept each potential sale on a case by case basis.
“A lot of the negativity from merchants towards Groupon is that you’re required to sell 200, 300, 400 appointments in a single Groupon deal,” says Thawley. “What that means for them is for a very long period of time – sometimes upwards of six months – they are just having a very challenging issue pushing all of these Groupon deals through their system without disrupting their traditional customer flow.”
So while Bidzy’s platform may inevitably encourage customers to haggle and perhaps try their luck at getting a discount price, it’s not a like-for-like competitor with daily deals since merchants retain control over whether they take on each new customer. For them it’s a zero risk, low hassle way to get new customers through the door at times when they specifically need them, increasing utilization rates and supplementing their normal cash flow. And at the end of the day, if a customer is trying their luck asking to pay too little, the merchant can just ignore them and wait for a better bid to drop in.
Having talked to plenty of services business in the course of setting up the business, Bidzy’s founders point out that most operate at less than full capacity at certain times of day – “lots operate at 50 percent utilization” overall, says Thawley. And that’s the pretty big business problem Bidzy is aiming to fix — as well as offering consumers a more convenient way to get stuff done. “Bidzy allows local services businesses to monetize what was previously un-utilized time, and to augment their existing customer base in a very bite-sized manor,” he says.
The startup is launching in one city — San Francisco — and targeting personal services categories including hair and beauty, nails, fitness, massage, automotive, and home and pet, which it believes are best suited to the last-minute service/convenience problem it’s aiming to crack. Once usage data starts flowing in it can of course look to adjust the categories it covers, based on where traction is and isn’t taking place.
“We’re the first people to acknowledge that it’s never going to be 100 percent of [local services] appointments going through the Bidzy platform,” says Bidzy’s other co-founder Sven Jensen. “There’s certain situations where people on the consumer side do want more control… The woman who’s going to get her haircut the morning of her marriage is probably going to want someone she’s spent a lot of time researching.”
But for every pre-wedding hair cut there are undoubtedly scores more consumers needing a quick short-back-and-sides on a quiet Tuesday afternoon. And that’s where Bidzy is positioning itself to take a percentage cut of all those extra transactions it makes possible.
Although it’s just the beginning for Bidzy’s platform — which today launches as an iOS app and website (an Android app due in six to eight weeks’ time) — the startup has managed to sign up around 15,000 merchants in the Bay Area already, with relatively minimal levels of merchant outreach (and no paying customers yet).
Thawley and Jensen, have been bootstrapping Bidzy to the tune of just $70,000, which makes its merchant acquisition efforts all the more impressive. Bidzy’s permanent headcount is currently just the two co-founders, although they have used contractors to help get the initial swathe of merchants signed up.
The founders met in San Francisco about five years ago, through another startup Jensen was working on, and started talking about setting up “a platform for what a buyer wants” early last year. They both have retail experience to draw on as they build out Bidzy. After a stint in the Air Force, Thawley headed to business school and went into business strategy consultancy — where eBay become a client. Jensen worked in investment banking before doing the sports equipment marketplace startup which is where he met Thawley.
After the buzz generated by launching at Disrupt, the founders say they intend to start looking to raise their first round — to build out the Bidzy team and technology, ramp up customer and merchant acquisition and start expanding geographically. Fittingly for Disrupt NY, New York is the next city on their roadmap, but they also see a lot of potential for Bidzy in less well-served parts of the U.S.
“We built our technology to have a very rapid rollout across the United States. And our hope is to go from San Francisco to New York, and once those two markets are operating comfortably we think a lot of the value is actually getting into middle America where a lot of these solutions are much less prevalent,” says Thawley. “We’ve got a very automated means of merchant outreach – we spent a lot of time building out our North American database – it’s stuff that should hopefully happen very quickly.”
Questions & Answers
Judges: Nikolaos Bonatsos (General Catalyst), Tracy Chou (Pinterest), Matt Mazzeo (Lowercase Capital), Ron Palmeri (MkII Ventures).
Q: How do you provide apples to apples comparisons of service providers who are used to providing services at different price points?
A: That’s mainly based on star rating. So if you are submitting a bid for a five star hair cut then that’s automatically going to be pushing out to the group of merchants who receive those ratings on traditional online ratings forms so when you submit your bid and if a merchant qualified it, based on their geolocation and their star rating, it’s actually the first merchant to accept the bid that earns your service. This is how Bidzy’s operating on day one. Further down the line — assuming we have merchants that are auto-accepting or accepting at a very fast rate then we’d use our own algorithm to decide what’s going to provide the best experience for the customer.
Q: What are the top use cases that you have in mind? What are the top three verticals?
A: I think different people are going to have different products that they use. Some people would be fine with getting a haircut and using Bidzy to get that last minute haircut when you need something quick and simple. Other people wouldn’t let us go near their hair but maybe something like a manicure, or maybe something like dog walking — or even something like getting your house or apartment cleaned — you as a customer think of more as a commoditised experience. Consumers can still set a star rating to have a level of quality assurance but the more commoditised the experience, the easier for the customer to get their head around it.
Q: One of the challenges is this is a classic two-sided market. You have to have enough providers, in order for people to find people that are willing to fulfil the bid. That’s usually a pretty hard problem to do so how are you tackling that?
A: It’s the chicken and egg problem but we think our chicken lays a lot of eggs. Speaking specifically to the merchant side, we’ve got two main answers to that: we’re offering them a customer at 2pm today whether they want it or not. On top of that, in order to reduce this friction and not have this problem of a lot of boots on the ground in order to sell Bidzy into these businesses we’ve developed a proprietary app that regardless of whether the merchant’s on our platform or not when you submit that bid for the oil change, every merchant in the local area receives a telephone call, an SMS and an email notifying them that this appointment’s available. And they can choose whether or not they log on to the Bidzy platform in order to find out more.
On the consumer side it’s a little bit more of a traditional playbook. We’ve got all of the normal social hooks built into our app and our website. There’s Facebook and Twitter sharing. We already have a refer a friend program — if I tell you about it and you enter a code, I’m getting $10 to spend on my next bid.
Q: How far along is the company in terms of team, market, customers?
A: We’ve launched about three hours ago. So far the numbers are really through the roof! We’ve been developing for approx. 7 months. The business has been in place for 10. We spent first few months mainly doing research. The team right now is Sven & myself, as well as a team of contract developers but post-TechCrunch we’re hoping to raise a round of funding an build out a more significant sized in-house team. And then we’ve built out the technology to date so we can rapidly deploy across all U.S. cities although we’re launching today in San Francisco
Q: For the first time that somebody fires up the app how are you going to make sure that whatever that person requests, you’re going to be able to fulfil that?
A: We start off by making the customer put bids in our buckets. It’s not a Craiglist format where you can type in free-form text. The customer is pushed in an avenue to structure their data. There’s very few points where you get to put in unstructured data. There’s some bids that we’re never going to be able to offer — if you’re looking for something very specific at two o’clock in the morning and merchants aren’t working at that point. We’re not going to solve that problem; nor is anyone. But speaking to these merchants, a lot of them are small businesses, a lot of them are desperate — they’re working at about 50% capacity. We’re giving them a new channel to get a customer. They know how much they’re going to get, they didn’t have to do anything in advance of it and they get extra money.