Josh Elman, one of the partners at Greylock, gave a great talk on How to Build on Other Platforms at the Weapons of Mass Distribution conference a few years ago. It's really worth watching if you're thinking about building on another platform:
Google traffic and AWS are commodities to an extent since they're replaceable. So Heroku and RetailMeNot don't qualify in my book.
More importantly though, the trend is that most companies relying on someone else's platform for survival are cannibalized. A few examples to the contrary don't make it a good idea.
I think the nuance that's often missed is that you should never build your startup on another company's platform without a contract (or some sort of contingency plan).
They've successful gamed SEO to show up for every "<site> coupon/promo code" search result. Unfortunately it's been years since I've actually found a working code on their site. These days I don't even bother clicking on their links.
It depends on the vertical, but from my experience they're still useful for pizza chains and rental cars. I use Amazon too much to know if they're useful for much else.
If you find a better coupon site, figure out why it's not ranking #1, then go build a search engine that rewards whatever that is, and you can kill Google and make billions.
I use their papa johns codes frequently, they always seem to be good for 40% off - however lately I've noticed papa johns trying to cut out the middleman and run their own coupon adwords offers
Wow, I always thought retailmenot was like a small 2 person company with a bunch of scripts to scrape coupons and rank high in SEO. What do their 500+ employees do.
It used to be a 2-person company before it was acquired. A large part, surprisingly is scale. During Black Friday to Cyber Monday, for instance, the site is hit pretty hard by all the on-line shoppers. There's also a ton of different sites they manage, of which RetailMeNot is just one (deals2buy is another, a bunch of other international sites). They also have iOS and Android apps, mobile versions of the sites and a lot of community engagement.
There's a whole department to figure out which coupons do well and which affiliates pay better than which other ones to figure out which ones to feature. There's another department to manage all the different commission rates (mostly to call those companies to pay more). There's a whole community engagement group that tries to get more users to submit coupons or more users to use the site. There's a sales department that tries to get exclusive coupons in return for featuring them. There's even customer service to deal with users that are having trouble. Finally, there's a department to acquire new properties. Also, all those international coupon sites have their own mini versions of all these departments.
You also need HR, finance, office manager, etc. The headcount goes up pretty quick. When I left it was around 400 employees. It actually hasn't grown that much in 3+ years.
Pretty horrible outcome for anyone who got in on their IPO ($21/share) just 4 years ago.
It's kind of a fitting end for mostly a sham company. The business model was shaky at best, mostly just milking first page rankings all over google.
The argument that coupon codes incent buying activity is valid, but literally all this company did was be the first on google. If the actual retailer ranked ahead of RTMN for coupon searches, RTMN wouldn't be anywhere near where it is today, and retailers sales would be exactly the same.
It's not easy to be first on google, especially on brands where you don't own the brand. If you can do this consistently please immediately set up a company, charge, and go eventually go public.
Retailers sales would be the same, but they wouldn't be paying unnecessary commission to RMN. Sales commissions make sense when someone is directing new customers to a business. But as has been said in this thread, they were simply better at SEO. The customer was already a) aware of said product and b) showing intention to purchase. These are precisely the value propositions that affiliate marketing was designed for.
how do borderline scam businesses like these go public? why do people buy their shares? why has ipo market turned into a swamp where sneaky insiders unload their useless shares to?
> RetailMeNot started out as WhaleShark Media and changed its name in 2013 after acquiring RetailMeNot.com, an Australian-based coupon site founded in 2006.
They started as such the un-mainstream group, trying to aggregate coupon codes so you could get fair prices without getting hammered with marketing. My, how things have changed. Kudos to them for the payout, but sigh.
[+] [-] AznHisoka|9 years ago|reply
That's true.. and if you followed that advice..
- You would never have started retailmenot (too dependent on Google traffic)
- You would never start Buffer and have over 10 million in annual revenue (too dependent on twitter api)
- You would never would have started Heroku and get acquired for millions (too dependent on AWS)
- You would never have started SimilarWeb and be valued at over 100 million dollars (too dependent on browser extensions and Google)
[+] [-] andygcook|9 years ago|reply
Josh Elman "How To Build On Other Platforms" - https://www.youtube.com/watch?v=m0j1NaFpEkg
[+] [-] timdorr|9 years ago|reply
But for every success, there are dozens (if not hundreds) of failures because the giant decided to brush off their shoulders.
It's a risk you just have to factor into building a business this way. And always have a ready-to-go Plan B for when that risk turns into reality.
[+] [-] theGimp|9 years ago|reply
More importantly though, the trend is that most companies relying on someone else's platform for survival are cannibalized. A few examples to the contrary don't make it a good idea.
[+] [-] mikelyons|9 years ago|reply
[+] [-] kbenson|9 years ago|reply
[+] [-] TallGuyShort|9 years ago|reply
... still pretty true.
[+] [-] poxrud|9 years ago|reply
[+] [-] VuWall-Matt|9 years ago|reply
[+] [-] jonknee|9 years ago|reply
[+] [-] a5seo|9 years ago|reply
[+] [-] utnick|9 years ago|reply
[+] [-] unknown|9 years ago|reply
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[+] [-] madebysquares|9 years ago|reply
[+] [-] altoz|9 years ago|reply
It used to be a 2-person company before it was acquired. A large part, surprisingly is scale. During Black Friday to Cyber Monday, for instance, the site is hit pretty hard by all the on-line shoppers. There's also a ton of different sites they manage, of which RetailMeNot is just one (deals2buy is another, a bunch of other international sites). They also have iOS and Android apps, mobile versions of the sites and a lot of community engagement.
There's a whole department to figure out which coupons do well and which affiliates pay better than which other ones to figure out which ones to feature. There's another department to manage all the different commission rates (mostly to call those companies to pay more). There's a whole community engagement group that tries to get more users to submit coupons or more users to use the site. There's a sales department that tries to get exclusive coupons in return for featuring them. There's even customer service to deal with users that are having trouble. Finally, there's a department to acquire new properties. Also, all those international coupon sites have their own mini versions of all these departments.
You also need HR, finance, office manager, etc. The headcount goes up pretty quick. When I left it was around 400 employees. It actually hasn't grown that much in 3+ years.
[+] [-] AznHisoka|9 years ago|reply
[+] [-] rcarrigan87|9 years ago|reply
It's kind of a fitting end for mostly a sham company. The business model was shaky at best, mostly just milking first page rankings all over google.
The argument that coupon codes incent buying activity is valid, but literally all this company did was be the first on google. If the actual retailer ranked ahead of RTMN for coupon searches, RTMN wouldn't be anywhere near where it is today, and retailers sales would be exactly the same.
[+] [-] nabraham|9 years ago|reply
[+] [-] qeternity|9 years ago|reply
[+] [-] colinbartlett|9 years ago|reply
[+] [-] paulcole|9 years ago|reply
Anyone who got in at 21 and didn't sell at 42? They have all my sympathy.
[+] [-] aaron695|9 years ago|reply
Good example of a pivot from what I assume? was a hack for fun to a business.
Also a good example of SV style buyouts etc
[+] [-] jasongill|9 years ago|reply
[+] [-] elvirs|9 years ago|reply
[+] [-] nkkollaw|9 years ago|reply
[+] [-] knownothing|9 years ago|reply
[+] [-] omarchowdhury|9 years ago|reply
[+] [-] elastic_church|9 years ago|reply
huh so thats what happened
[+] [-] mwexler|9 years ago|reply
[+] [-] unknown|9 years ago|reply
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[+] [-] unknown|9 years ago|reply
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[+] [-] dbg31415|9 years ago|reply
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[+] [-] unixhero|9 years ago|reply