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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

January 13, 2015 at 12:12 PM

Urbanspoon app shutting down after Zomato takeover

Seattle’s Urbanspoon will let go about 10 percent of its employees and phase out its popular restaurant-finding app after being acquired by an Indian startup with global ambitions.

New Delhi-based Zomato, a restaurant search venture backed with $113 million in venture funding, announced yesterday that it was acquiring Urbanspoon.

Terms weren’t disclosed but Zomato Chief Executive Deepinder Goyal confirmed in an interview today that the deal was in the $60 million range.

Urbanspoon was a runaway success and a darling of Apple after its restaurant-finding app became an early hit on the iOS platform. Apple featured it in stores and TV ads in 2008 after it launched the App Store.

The Urbanspoon app – with a patented “shake” interface that activates a slot-machine like menu – has been downloaded tens of millions of times and is still used 30 million times a month.

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But after being sold to media giant IAC in 2009 and going through several restructurings, it was losing money and relegated to a far corner of the conglomerate.

IAC called Zomato in November to float a sale. It was a timely move. Zomato was looking to establish a presence in the U.S., Canada and Australia, where Urbanspoon is widely used, Zomato’s Goyal said today after an all-hands meeting with Urbanspoon employees.

Zomato takes a different approach than Urbanspoon and will be shutting down the Seattle-built app by the end of March.

Urbanspoon used crowdsourcing to build its restaurant content library. Zomato sends people into the field to make sales calls to restaurants and verify menu information. Its local offices also do data entry, building up their regional content.

Zomato hopes to retain the Urbanspoon software developers, but it’s going to let go four or five members of the 40-person team. It could add additional employees, such as sales people, and eventually bring the office to about 50 people, Goyal said.

Zomato will now have a majority of its business in the U.S., so it could move more of its employees to the country in the future. But Goyal hasn’t decided whether to locate the larger base of operations in Seattle or another region, such as Silicon Valley.

Urbanspoon is now along Eastlake Avenue in Seattle but is preparing to move to another office, perhaps in a neighborhood like Fremont with a higher concentration of restaurants, according to Keela Robison, its chief executive.

Robison said she had been having conversations with IAC about how to find synergies with other groups in the conglomerate but “it wasn’t all that obvious.” Urbanspoon was moved from the group that handles city listings to the group that includes Ask.com.

“I think that that was indicative of a lack of true fit within the IAC framework,” she said. “We continued to grow aggressively over the last few years but doing so not at a pace that we felt was really possible with a parent company that had more synergy and direct relationships.”

Urbanspoon attempted to diversify its platform with the launch of a reservations tool for restaurants, but it was sold off in 2013, a year the core business lost money.

Urbanspoon still has a valuable brand but Zomato will drop it in pursuit of a common brand across its international operations.

Goyal acknowledged that it will “lose a lot of brand equity” in the short-term but longer-term it’s better for the company.

“It will actually become a pain for us to manage two brands within the same company and the product has to look exactly the same,” he said. “It’s going to be harder for us in the longer term.”

Zomato has done the same thing with five acquisitions in different countries. Urbanspoon will be trickier because it’s bigger “and the depth of the brand in these countries,” Goyal said, but he’s expecting to make the switch in late March when a new version of the Zomato app is released.

Urbanspoon users will receive a suggestion that they switch over to the new app.

 

Comments | Topics: app, Apple, India

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