Interview: Yodle

Back in March 2005, Nathaniel Stevens, a student at the Wharton Business School, founded a company designed to help local businesses find and market to consumers online. The business, then called NatPal, now Yodle, was tested on the streets of Philly. By the end of that summer Nathaniel and his friend Ben Rubenstein had secured 100 local businesses for the service. The potential had been proven and the winning of a business planning contest at Wharton later that year set the company fair as it entered discussions with VCs.

By November 2006 Yodle had secured significant series A funding from Bessemer Venture Partners. It began rapidly building a team based around what chief executive Court Cunningham describes as ‘strong, smart, hungry entrepreneurs’ together with some familiar and experienced faces from the world of online marketing and advertising. Court himself was previously at the ‘potentially Google-acquired’ Doubleclick, and David Rosenblatt, CEO of Doubleclick, is on the Yodle Board of Directors. The Yodle advisory board also includes Iggy Fanlo, CEO of Adbrite.

Experienced hands such as these are clearly a good choice for a company that has ambitions to be number one in the local online advertising market.

The market has the potential to be huge. US small businesses currently spend $20 billion a year on Yellow Pages, for example, but only 3% of that spend goes online. It is this combination of potential and team that gives Yodle’s investors confidence.

But the market is also highly competitive. Quite apart form companies like Leads.com the ‘G’ word hangs heavily over the online advertising world. Google Local, hyper-local/personal targeted ads and even an audio version of adwords make a powerful play for the local advertising market both online and off.

Nevertheless, CEO Court Cunningham believes Yodle offers something different from Google, and something he suggests is more valuable to local professionals and tradespeople.

Everything Google does is self-service and horizontal. Everything Yodle does is full service and vertical.

We have optimised landing pages for our customers which are designed to generate calls – to maximise conversion … We also have highly sophisticated algorithms in place to ensure calls are routed efficiently to customers.

On average businesses spend around $900 with us and we’d expect them to see a return on that investment of 8-10 times.

Arguably, however, this vertical approach can be achieved by hiring a decent web designer and someone to manage an adwords campaign. OK, more steps and for a whole range of businesses one could see why Yodle’s leads focused, one-stop-shop might prove attractive.

And Yodle is certainly growing. It now has 700 customers (perhaps a little few bearing in mind the 25 million US SMBs in the market), a team of 60 (largely focused on direct sales) and has recently opened offices in Boston and Atlanta to add to its NYC headquarters.

It’ll be fascinating to see how quickly Yodle evolves over the next 12 months and what its strategy will be in the medium term.

If I were to speculate, I’d say one can’t help but feel that with the Doubleclick influence on its boards and its proprietary algorithms, Yodle might attract the attention of one particular elephant in the room. At which point it may become yet another company to live the Web 2.0 dream exit – a sale to Google.

On the other hand, if the Google deal with Doubleclick falls through, perhaps it’ll be the latter who’ll be courting Nathaniel Stevens’ young company.

Alex is the founder and editor of SmallBizPod, the UK's first podcast dedicated to small business, start-ups and entrepreneurship. Alex writes about topical small business issues, entrepreneurs and anything else that catches his eye here on the small business blog. http://www.smallbizpod.co.uk