Tag Archives: Martin Tobias

Tippr’s Efforts to Enforce Patents Are Over

Tippr’s efforts to use patents that it had acquired to help persuade deals companies into forming partnerships appears to be over, at least for now. A federal patent lawsuit it brought in February against 14 companies – mostly competing white label deals providers — has ground to a halt, with all actions settled or dismissed by mid-September.

Named in the suit were a “who’s who” of the white label space, including such players as BuyWithMe, Local Offer Network, Second Street Media, Nimble Commerce, Analog Analytics, DealOn (ReachDeals), HomeRun, Shoutback, Deal Co-op, Chompon, Offer Foundry, OwnLocal and others. Industry leaders Groupon and Living Social were not directly named in the suit, although Groupon has acquired Offer Foundry since the suit began.

There isn’t a lot of information available on the lawsuit, and it is not clear if the patent strategy persuaded any of the 14 companies to provide Tippr with cash, equity or any form of partnership. Tippr itself pronounced itself satisfied with the confidential terms. An industry blog, XConomy, cited sources that said that Tippr had been seeking four percent of gross revenues.

“My objective with the patents has always been to enable innovation and to get an ecosystem enabled with the leading technology,” said CEO Martin Tobias in an email to BIA/Kelsey. “Our settlements enable us and the industry to move forward in a very positive way. We are very happy to be able to focus on building a great social commerce ecosystem along with our partners and publishers.”

Tippr had acquired the batch of deals-related patents last February. The patents were originally issued to deals pioneer Mercata, and then sold in bankruptcy court to Paul Allen’s Vulcan Ventures. The patents largely related to dynamic pricing, in which deals become progressively cheaper as they reach a threshold of buyers. While not widely used, HomeRun, for instance, ran dynamic pricing auctions for its “avalanche” branded deals. HomeRun was sold a few weeks ago to Reardon Commerce, reportedly for $87 million in cash and stock.

In our conversations around the industry, the common observation was that it was going to be an expensive and long ride for Tippr to continue to seek legal enforcement of its patents. There was also no guarantee of a positive result for the company. The patents don’t overtly relate to many of the deals companies, which mostly focus on straight-ahead group buying.

Meanwhile, Tippr apparently continues to pursue its dual strategy of developing destination deal sites in 17 markets, along with white label partnerships with media companies such as Belo, NBC, Fox, Hearst, Univision, and others. It works with roughly 60 traditional media companies. The company also reports 1,200 affiliates, which earn a commission of up to 15 percent for featuring Tippr deals.

Tippr Claims #3 Rank in Deal a Day Space

The deal-a day marketplace is shaping up as a couple of leading brands in each market; some local media using white label solutions; and a healthy dose of aggregators repeating most or all the deals.

Seeing to cut across much of the deal a day ecosystem is Seattle-based Tippr, a well-funded 40-person company that focuses on white label deals with publishers, as well as its own destination sites. It now has deal-a-day sites in 12 cities, including Atlanta, Austin, Boston, Chicago, Dallas, Honolulu, Los Angeles, New York, San Diego, San Francisco, Seattle and Washington D.C.

The company officially launched in February 2010 in Seattle with 6,000 subscribers, and has grown from there, both organically and via acquisition. It recently acquired, for instance, ChiTown Deals in Chicago and Fan Force in Austin. Indeed, by some counts (i.e. Compete.com) it has surpassed BuyWithme.com and become the #3 deal a day site by usage after Groupon and Living Social (although well behind those sites.) It also says its user base is now up to 500,000 email subs and Facebook fans. Compete says it has 670,315 uniques.

CEO Martin Tobias, an early Microsoft pioneer who went on to launch several green industry and software companies, says he mostly envisions the destination sites as a demo that gives the company more credibillity to potential partners. He adds that he was originally inspired to do a deal-a-day venture by two things: his recent experience developing Kashless, an online classifieds and email postage system in 120 cities; and owning a couple of bars and high end restaurants.

A Groupon promotion was conducted at one of establishments, and the results were “OK.” But he thought he could do better. From his experience with Kashless, he realized that a promotional effort shouldn’t entirely be about a coupon or gift certificate. It should be about developing long-term customer relationships. “We’re always struggling to find effective ways to get people in the door,” he said.

One leg of the strategy is to offer three deals a day, instead of just one or two. The partner sites don’t have multiple deals yet, but Tobias says the company is working on it. Having multiple deals is especially important for giving new visitors “more than one thing to look at,” he says.

Another leg of the strategy is use its arsenal of products to work with as many local sites as possible and build a solid network. One effort to land local media sites as partners is to customize Tippr’s integration with local sites to match their look-and-feel. Tobias is proud of the site’s “rich and open” API, which he favorably compares to sites such as Groupon, which he believes are more closed and less flexible. They also maintain too tight a rein on customer information, he believes, noting that it rightfully should be shared with the merchant.

Mobile also plays a role. Coming out next week is is Tipper’s iPhone app, which is fully integrated in its white label platform. Android and Blackberrry services will soon follow. “Mobile is a very important part of the white label platform,” says Tobias.

The combination of the white label sites and the destination site, along with its strong financing, has put Tippr in position to work with top national brands, says Tobias One big deal currently running, for instance, is for the Rhapsody online radio service, which is offered at $39.95 for six months.

The company is now pushing especially hard for growth, signing deals with 38 aggregators, and competing as a white label partner against other white labellers such as Nimble Commerce, Analog Analytics, Ludic Labs’ Offer Foundry, Matchbin, Deal Current and Shoutback, among others.

At this point, Tobias argues that Tippr has developed “the largest footprint of white label deal-a-day sites, with 20 different sites using the platform, In some markets, there are multiple publishers using the platform. In Austin, for instance, there are five sites using Tippr. The impact is that Tippr’s deals are effectively verticalized for different audiences with different demographics, argues Tobias. He asserts this approach is superior to Groupon’s recently announced personalization strategy, which essentially has forced it to segment the brand, providing less volume to advertisers.

One advantage that Tippr holds over the others: the ability to leverage its acquisition of the Mercata dynamic pricing patents that kicked off the whole deal-a-day phenomenon in 1997 — something that Tobias says the company spent a lot of money on. Dynamic pricing is being increasingly embraced. It is the system that allows items to become cheaper when more people buy into them.

Patent law is always murky, but Tippr’s lawyers apparently see real potential to use the patents to land deals. Tobias says he just hopes to use the patents to “bring innovations to the market,” but it isn’t really clear how aggressive he will be in enforcing his patents. Legal actions typically take many years.