Judy’s Book follows BackFence, collapses

October 24, 2007 | Dan Kaplan | Comments | |

deals-and-coupons-near-10025-deals-by-judy_s-book.jpgJudy’s Book, a site that let you search business listings for discounts and coupons, has hit the end of a $10.5 million runway and shut down, raising more questions about local business listing and community sites.

The collapse of the Seattle-based company follows the closure of BackFence this summer. BackFence said it had experienced unspecified “internal” problems, suggesting its failure was company specific. But the subsequent failure of Judy’s Book raises more questions about the sector at large. Judy’s Book started as a place where neighbors could share information about their communities, and shifted its model over time to search business listings.

Did both of these companies face a problem of execution or are there deeper issues with the local web site model as a whole? Regardless, locally focused sites continue to raise money, and it’s not clear that the sector is doomed. Yelp, for example, has done a solid job of local business and event search and continues to grow steadily, with around four million users.

Judy’s Book, like Yelp, aimed high and expanded nationally quickly. But unlike Yelp, its traction never kept pace with its ambitions or the expectations of its investors. As the company’s chief executive, told the Seattle PI, “our investors were tired…The board members said there wasn’t enough terminal velocity to see the types of returns that they were looking for.”

The company was backed by investors that included Mobius Venture Capital (itself going out of business), Ignition Partners, Ackerley Partners and angel investors.

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About the Author, Dan Kaplan

Once upon a time, Dan considered himself a magazine journalist with dreams of "The New Yorker" and a couple of well-reviewed but only mildly successful books. Then one day, life, as it is known to do, decided it was time for rebirth. Like so many things before it, this rebirth was conceived on a mostly-empty plane to Reno. Now, instead of magazine writing, Dan would plunge into the world of New Media and write for Matt Marshall's blog.

It's funny how it goes.

  • I'd throw Insider Pages and Zipingo (Intuit) onto the list of well financed local review sites that haven't been able to find the right recipe.

    Yelp is thrashing all comers.
  • Darian
    As a former executive of Backfence (and Tribe.net which also focused on local--and full disclosure: I'm now an executive at Cyworld US, a social network that isn't currently focused on local) I'd like to share a few thoughts:

    From my experience building local takes either a long amount of time (Craig's List took years to be successful outside of San Francisco and is still a fantastic service) or you need an incredible amount of money (Microsoft built Sidewalk.com and then merged with Citysearch now an IAC company) to pay for editorial as well as the technology that gives consumers a voice.

    It is not a sexy business. It is not a quick flip for a VC. Yelp, however, may prove me wrong. It does have great growth and is focusing on restaurants and other needs of 20 somethings. This is a solid approach. I don't recall how much they've raised but I guarantee you when all is said and done they will have raised $50M-$100M before getting bought by a larger entity or going the public route. And the multiples for the acquirer probably won't be as big as other industry segments.

    Interestingly there are some tangential business that would like to figure this local problem out but can't either see the larger picture or invest in the long-term (10-15 years) future. The television networks--think about your local CBS, NBC, or ABC affiliate--should be able to own this space. The yellow page directories should be able to own this space. Companies like Ebay--that miss out on a huge amount of goods sold/traded locally should own this space. And, last but not least, the newspaper industry should own this space.

    Backfence had the right idea. We knew how to make revenue, we knew how to commit to a community. What we didn't know how to do was cost-effectively grow across hundreds of communities at the same time. And, as aluded to, we had some internal issues that ensured we never had the chance.

    Judy's Book had the right idea. They were able to get tens of thousands of sought after reviews (I used them for plumbers, locksmiths and other trust-specific local needs).

    Tribe.net had the right idea. Use your social network to determine who you trust, why you trust them, and how to get things done--locally--as most social interactions are inherently local.

    Unfortunately we didn't put all the pieces together successfully or we focused on two many aspects and made to many promises to investors that wanted to see Myspace-like or Facebook-like growth.

    Rather long-winded, but I'm hopeful this explains some of the issues the local segment faces. I'm looking forward to seeing what companies like Outside.in and Fatdoor (and even MerchantCircle) can do. Hopefully someone will get it right. Also, don't discount IAC (Ask/Citysearch/Evite is a pretty powerful combination), Google, or even Yahoo!. And, going forward the social networks will definitely try their hand at local. With $240M from Microsoft, Facebook will probably make some effort.

    I'm looking forward to the next round of companies that take this huge challenge on. Let's celebrate Judy's Book's effort and companies like it. Inevitably someone will get it right and it will make all our lives easier/better--local affects you and me on a daily basis. The Internet is the perfect medium for enhancing local connections in all their forms.