Deal Umpire Investor Presentation

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  • 1. Empowering Small Businesses© Copyright 2011 Deal Umpire, LLC.
  • 2. |2Group Buying Market Opportunity >$1B 2010 Industry Revenue 600+ Projected $6B Revenue by 2015 Deal Sites © Diamond Management & Technology Consultants, Inc.40,000 U.S. dealsfeatured in 1Q 2011 Groupon is the “fastest growing company ever” Copyright 2011 © Deal Umpire, LLC
  • 3. “…find inefficiencies,make them efficientand take your pieceof the pie…” – Tim O’Shaughnessy, CEO Living Social
  • 4. |4Group Buying Market Challenges Deal Sites face Difficult for Deal Sites difficulty to scale and enter Differentiating New Markets © Diamond Management & Technology Consultants, Inc.Merchants increasinglyaware of Limitations Favors Consumers more than Merchants Copyright 2011 © Deal Umpire, LLC
  • 5. |5Market Inequality Hurts Both Merchants and Deal Sites • Customer acquisition is highly • Do I need to run a daily deal to competitive and expensive. compete? • Merchants think all daily deals • I can’t profit discounting discounts! are bad for their business • How do I select a deal site • How do I differentiate my deal intelligently? site? • Is there any way to profit from • How can I reach more running a daily deal? merchants while remaining cost • What terms are negotiable? effective? © Diamond Management & Technology Consultants, Inc. How can we make this market more efficient? Copyright 2011 © Deal Umpire, LLC
  • 6. |6What is Deal Umpire? Before Deal Umpire After Deal Umpire •Inefficient •Efficient •Opaque •Transparent •Chaotic •Organized © Diamond Management & Technology Consultants, Inc. Deal Umpire is the worlds first online marketplace where Merchants and Deal Sites come together Copyright 2011 © Deal Umpire, LLC
  • 7. |7What People are Saying About Deal Umpire “Deal Umpire May Level The Playing Field Among Daily Deal Sites” “Chicagoland Chamber “Deal Umpire Aims to of Commerce Gives Help Small Biz Maximize Support to Deal Umpire” Daily Deals” “Deal Umpire Gives “Deal Umpire, an Ebay for Merchants Wanting to © Diamond Management & Technology Consultants, Inc. Merchants More Control” use Groupon” “Deal Umpire: Making “Deal Umpire Will Change Daily Deals Sustainable How the Nation Does for Vendors” “How Deal Umpire Is Business” Making Deal Biz More Efficient” Copyright 2011 © Deal Umpire, LLC
  • 8. |8How does Deal Umpire work? Post  Merchant posts a deal and creates an auction Bid  Deal sites bid for merchants business © Diamond Management & Technology Consultants, Inc. Select  Merchant chooses the deal site that is the best fitConnect  The deal site and merchant connectFeature  Merchants deal is featured on the deal site WIN!  Merchant and Deal Site Both Win! Copyright 2011 © Deal Umpire, LLC
  • 9. Merchants come to Deal Umpire fortransparency and power…..and Deal sites come to find leadsand differentiate themselves tomerchants
  • 10. | 10What are the Merchant Benefits?Transparency• See how each deal site differentiates itself• Compare options to make a prudent decision On every auction, Deal Sites provideFilter Information critical information is extremely useful to Merchants, such as:• Digest all of the information provided by each deal – Revenue Split site – Payout Terms• Recognize the differences and save valuable time – Credit Card Fees – Subscriber ReachProfitability – Subscriber Demographics• Create a more competitive market for daily deals – When a Deal can be featured• Daily deal sites will offer favorable terms to win the – Deal Site Business Model – Media Coverage auction – Marketing Materials © Diamond Management & Technology Consultants, Inc.Nothing to Lose• The only cost to the merchant is the $10 upfront posting fee Deal Umpire helps merchants make the right decision by providing a platform to choose the best deal site partner Copyright 2011 © Deal Umpire, LLC
  • 11. | 11What are the Daily Deal Site Benefits?Deal Sourcing• Helps deal sites reduce their sales force by aggregating merchants ready to run dealsProduct Differentiation• Helps deal sites illustrate why they are the right fit for a particular merchantBidding Flexibility• Freedom to customize their bid for each unique merchant criteriaNothing to Lose• No fees charged to a deal site unless it is chosen as the winning bidderFree Advertising © Diamond Management & Technology Consultants, Inc.• Familiarizes merchants with a deal site and its product offeringEase of Entering New Markets:• Helps reduce the barriers to scale when entering new markets by sourcing deals Deal Umpire provides a platform where Deal Sites can differentiate their product and find new merchants Copyright 2011 © Deal Umpire, LLC
  • 12. | 12How Does Deal Umpire Generate Revenue?• Deal Sites pays $99 fee when chosen as winner of an auction• Merchants can choose up to 3 winners for each auction Deal Umpire Projected Revenue Deals/Week Average Number of Deal Sites Chosen Per Deal Posted Projected Revenue 1 2 3 based on Number of Customers 25 $130,000 $260,000 $390,000 50 $260,000 $520,000 $780,000 100 $520,000 $1,040,000 $1,560,000 © Diamond Management & Technology Consultants, Inc.• Assume 50 Deals Per Week• Assume 2 Deal Sites chosen as winners for each deal Number of Markets Annual Revenue Projected Revenue 1 $520,000 based on 5 $2,600,000 Number of Markets 10 $5,200,000 25 $13,000,000 50 $26,000,000 Copyright 2011 © Deal Umpire, LLC
  • 13. | 13 Deal Umpire Projections & Milestones Chicago National Market Multi City Launch Presence Leader•Beta version of platform •50+ deals/week in •Launch across all major •Businesses come to Dealfor Chicago only Chicago US cities Umpire to run deals•Signup 20 Deal Sites and •Expand platform to •National presence across •Deal Umpire becomes aMerchants support multiple cities all markets deal clearinghouse © Diamond Management & Technology Consultants, Inc.•Run 20+ live test deals •Mobile platform for •50+ deals/week in all •Deal Umpire promotesand get feedback merchants markets deal site consolidation Summer Fall Summer Fall 2011 2012 2012 2012 Copyright 2011 © Deal Umpire, LLC
  • 14. | 14Our Competition Deal Umpire has the first mover advantage in this space INVENTORY DEAL SITES PROVIDERS Transparency into Deal Site Offerings © Diamond Management & Technology Consultants, Inc. Competitive Marketplace Merchant Controls Deal Distribution Deal Inventory Copyright 2011 © Deal Umpire, LLC
  • 15. “The strong live and the weakdie. There is some bloodshed,and out of it emerges a muchleaner industry, which tendsto survive.” – Ratan Tata
  • 16. | 16The Deal Umpire Vision•Change the landscape of the Daily Deal industry•Empower Merchants with Transparency, Power, and Profitability © Diamond Management & Technology Consultants, Inc.•Level the playing field for Deal Sites•Promote Deal Site consolidation Copyright 2011 © Deal Umpire, LLC
  • 17. | 17The Deal Umpire Team Ryan Leavitt, CEO •Bachelor’s of Business Administration from the Ross School of Business at the University of Michigan •Former financial analyst at Goldman Sachs & Co •Former management consultant at PricewaterhouseCoopers (née Diamond Management & Technology Consultants) •Worked with C-level executives and focused on business process improvements for several Fortune 500 companies •Worked on the core IT integration team for a $3 billion airline merger Karthik Narayanaswami, CTO •Bachelor of Engineering from the University of Madras in India and Master of Science from Georgia Tech •Currently pursuing a Master of Liberal Arts in Government & International Relations at Harvard University •Management consultant at a leading advisory firm with experience in technology strategy and delivery •Worked in R&D, including the Los Alamos National Laboratory with several publications and (pending) patents •Deep technical and entrepreneurial experience as the co-founder of two startups Jeff Glazer, CFO © Diamond Management & Technology Consultants, Inc. •Bachelor’s Degree from the University of Michigan •Master’s of Accounting from the Ross School of Business at the University of Michigan •Former accountant at Deloitte & Touche •Member of an entrepreneurial think tank in Chicago, focused on real estate transactions •Owns and operates a medical spa in Illinois Venson Kuchipudi, CMO •Bachelor’s of Architecture from Andrews University in Michigan •Co-founded a series of successful software companies whose clients included the City of Chicago •Former Director of Internet Marketing at Infor Global Solutions, a $2.5 billion enterprise software company •Developed and executed the global web marketing programs and social media strategies •20 years in digital marketing experience from both startups to global enterprises Copyright 2011 © Deal Umpire, LLC
  • 18. APPENDIX
  • 19. | 19Deal Umpire Strategic Partnerships• Official endorsement from • Deal Umpire recommends Chamber MobManager platform to merchants• Powerful and influential members • Manages merchant experience• Introductions to business owners after the deal has been featured throughout Chicago (ex: Gibson’s by deal site and purchased by © Diamond Management & Technology Consultants, Inc. Group, Lettuce Entertain You, etc.) consumers• Liaison to leadership of merchant • Voucher Redemption associations (ex: National Restaurant Association) • Deal Analytics• Introduction to decision makers at • Loyalty Platform – Drip large national brands and retailers Marketing Campaign Copyright 2011 © Deal Umpire, LLC
  • 20. | 20Lifetime Value of a Merchant• Deal Sites pays $100 fee when chosen as winner of an auction• Merchants can choose up to 3 winners for each auction Annual Revenue Generated from One Merchant Deals Posted/Year Average Number of Deal Sites Chosen Per Deal Posted 1 2 3 1 $100 $200 $300 2 $200 $400 $600 3 $300 $600 $900 4 $400 $800 $1,200 Lifetime Value Generated from One Merchant Number of Years Deals Posted Each Year © Diamond Management & Technology Consultants, Inc. 1 2 3 4 1 $200 $400 $600 $800 2 $400 $800 $1,200 $1,600 3 $600 $1,200 $1,800 $2,400 4 $800 $1,600 $2,400 $3,200 Estimated Lifetime Value of a Merchant is $1,200 over 3 years - assuming the merchant posts 2 deals each year and chooses 2 deal site winners each time Copyright 2011 © Deal Umpire, LLC
  • 21. | 21Merchant Acquisition Cost Merchant Acquisition Cost - One Market Monthly AnnualNew Merchants Registered 200 2,400Fixed Outsourced Sales Cost* $12,500 $150,000Variable Outsourced Sales Cost ($25/merchant)* $5,000 $60,000Deal Umpire Customer Service Cost** $3,000 $36,000Total Merchant Acquisition Cost $20,500 $246,000Acquisition Cost of One Merchant $102.50 $102.50 Annual Merchant Acquisition Cost - Multiple Market ScenariosNumber of Markets 1 5 10 25 50 © Diamond Management & Technology Consultants, Inc.New Merchants Registered 2,400 12,000 24,000 60,000 120,000Fixed Outsourced Sales Cost* $150,000 $750,000 $1,500,000 $3,750,000 $7,500,000Variable Outsourced Sales Cost ($25/merchant)* $60,000 $300,000 $600,000 $1,500,000 $3,000,000Deal Umpire Customer Service Cost** $36,000 $180,000 $360,000 $900,000 $1,800,000Total Merchant Acquisition Cost $246,000 $1,230,000 $2,460,000 $6,150,000 $12,300,000Acquisition Cost of One Merchant $102.50 $102.50 $102.50 $102.50 $102.50*Assumption based on outsource sales force current rates**Assumes one full time Deal Umpire customer service rep for each market Copyright 2011 © Deal Umpire, LLC
  • 22. | 22Deal Umpire in the News Mondays Musings: Auction Sites Such As Deal Umpire May Level The Playing Field Among Daily Deal Sites Silicon City: How two local firms aim to help small biz maximize daily deals Chicagoland Chamber of Commerce gives support to local startup Deal Umpire How Deal Umpire Is Making Deal Biz More Efficient © Diamond Management & Technology Consultants, Inc. Deal Umpire: Making Daily Deals Sustainable for Vendors Meet Chicagoan Ryan Leavitt, entrepreneur, co-founder of Deal Umpire Copyright 2011 © Deal Umpire, LLC