SMALL BUSINESS

Locu Looks To Provide The 'Missing Piece' In Local Search

10/27/2011 10:51 pm ET | Updated Dec 27, 2011

In the not too distant future, Internet search engines and social networks will have access to data that will allow users to see in real-time the items sitting on a local store's shelves or the dishes sizzling in a neighborhood restaurant's kitchen.

But we're not quite there yet. As it exists today, local search faces a fundamental limitation -- that at least one data-focused startup hopes to overcome.

"It's great that we can now quickly find the nearest coffee shop on our mobile phone or look up the opening hours for a nearby shoe repair," says Rene Reinsberg, the co-founder and CEO of Boston-based Locu. "But what about what that small business has to offer?"

The reality of Reinsberg's rhetorical may not hit you until you consider a hypothetical. Say you're on a Sunday stroll through a neighborhood in New York's West Village when you suddenly start craving a bloody mary.

But not just any bloody mary will do. You want a homemade one, with clam juice, that is less than $15. So you whip out your phone and Google "bloody mary" plus "West Village" and the search engine spits out a list of local bars and restaurants that serve bloody marys. But the list of blue links that turn up is hardly helpful. By the time you use the search results to retrieve information on pricing and ingredients, having sifted through numerous Yelp reviews, menu platforms and sites of local restaurants and bars, with their clunky online menus, you're just about ready to settle for a can of tomato juice and a couple nips of vodka from the corner store.

Why can't Google, Facebook or any other local search tool just do the sifting for you and spit out a list of local bloody marys -- rather than a list of local businesses -- so you can quickly decide which clam-infused cocktail is best for you?

The reason is that, behind the scenes, there's no comprehensive database from which search engines can pull real-time menu data for the millions of restaurants and bars in the United States.

"We've been working on menus for more than two years now," says Shashi Seth, Yahoo's senior vice president of search and marketplaces. "This can't be done by people. You have to do this algorithmically and you have to do the type of indexing, crawling and understanding of elements that search engines employ."

That's where Locu hopes to step in. "It's the missing piece in local search," says Reinsberg, who believes his startup has a solution: Patent-pending technologies that will use machine learning to "create the world's largest repository of semantically annotated real-time small-business offerings."

Translation: Locu has invented an efficient way to build digital streams of interconnected small-business data that can make local search engines a lot smarter. The hope: Local merchants will have a more effective way to showcase their offerings and consumers can find exactly what they want.

If Reinsberg explains Locu in uber-technical terms, it may be because his startup was originally born in an MIT lab under the auspices of tech legend Tim Berners-Lee, who created the world's first Web browser and server in 1990. Last Fall, in a data course taught by Berners-Lee, Reinsberg, then an MBA candidate, teamed up with his current partners -- one other MBA and two computer science PhDs -- to compete in an in-class business-plan competition. They took home first prize, and with a nod of approval from one of the inventors of the Web, set out to launch Locu upon graduating in the spring.

Less than six months later, the startup has closed a $600,000 round of funding from early-stage investment fund Quotidian Ventures and a pack of prominent angel investors, including some it met through AngelList, a social network that connects startups with investors.

The company's first product is the soon-to-launch MenuPlatform, which offers restaurant owners an easy way to import their menus onto Locu's database and keep them up-to-date across each site that ends up licensing data from Locu's repository. While the company hopes to actively work with restaurants, which could be a potential source of revenue, Reinsberg says he doesn't necessarily need a restaurant's direct participation to collect and update its menu data. As long as a restaurant has a functioning site with a menu, Locu's technology can work to fetch the data. Its crawlers can then monitor the menu and automatically make changes to the data Locu stores when it detects updates.

But experts still say the most scalable way to collect such an immense amount of menu data is to "crowdsource" it –- that is, convince restaurants to load their data onto the system and keep it updated themselves. As with most things on the Web, MenuPlatform's power lies in the number of active users it can ultimately attract.

Fortunately for Locu and other local business data providers, local search is booming. In 2009, 82 percent of consumers were using search engines to find information about local businesses. Two years later, that stat has grown to 86 percent, due in large part to the increasing prevalence of mobile search. In addition, local search now accounts for 20 percent of all Google search queries, according to the company.

Anand Rajaraman, a data scientist at WalMart's e-commerce group, based in Silicon Valley, predicts that Facebook's recent changes to its platform could also encourage small businesses to spend more time sharing their data and enabling its structuring. After all, it's just another way to reach their most likely customers.

"Facebook enabling new forms of sharing will be a huge incentive for local businesses to open up their catalogs on a deeper level," Rajaraman says. "Imagine Facebook next launches an 'eat' button, just like it has just launched a 'listen' button. 'Nate ate pasta primavera at Joe's Pizzeria' could then be something you share with your friends. To make this happen, restaurants would then be incentivized to itemize their menu, and next to their menu items put the 'eat' button."

Since Locu formed, its efforts to tailor local search to restaurant menu items has largely mirrored the evolution of local search for non-food items.

Major search engines and social networks now often partner with big retailers to make not only general store listings but also actual on-site inventories searchable online.

Consumers can now use Google Shopping, for instance, to see which electronics stores in their neighborhood have a certain flat-screen television in stock. And earlier this month, Walmart partnered with Facebook to host updated inventory lists on Facebook pages for each of Walmart's 3,500 locations.

"Today, we don't connect people with Walmart," Rajaraman says of the search shift. "We connect people with Walmart items."

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