DealWatch: Alex Whiteside Q&A

by Denis Semchenko

A great example of one-person startup and an enthusiastic web entrepreneur since early years, the NSW-based ALEX WHITESIDE is the sole runner of DealWatch — a one-stop daily deal aggregator combining offers from voucher giants like LivingSocial, GroupOn, Cudo, Spreets and more.

Please tell us a little about yourself and how you stepped into the founder role at DealWatch, Alex.

I am quite passionate about both technology and the internet. I love how it changes our everyday lives in ways we could never have imagined. We are now better-connected and more engaged. Social media has changed and redefined entire marketing models.

During the boom of daily deals – around mid-2011 – I felt there was a growing need for a way to keep track of all the daily deals. I researched a model that would aggregate all the deals into the one site, and in less than a week I considered myself the founder of DealWatch. I’ve started many online ventures, DealWatch being the most successful to date.

What was your background/experience prior to starting DealWatch?

My passion for startups began when I was only 15. I founded a web hosting company named PulseHosting – I used my parents’ credit card to pay for server space, developed my own website and went out to find my own customers. I closed the business and sold all the customers as I was unable to support customers while in class at high school. However, my passion for startups has lived on, and since then I’ve launched many little startups including DealWatch. Once at university, I had a little more time, experience, knowledge and – most importantly – money to fund a larger startup.

Alex Whiteside of DealWatch

Can you tell us how the idea behind DealWatch came to life?

A partner and I actually began late 2010 with an idea to launch one of Wollongong’s first daily deal sites – we named it SealTheDeal. We approached many vendors, but soon realised how saturated the market was. We were competing head-on with companies that had multi-million dollar funding, media-backed projects (Cudo, OurDeal) and it was just impossible to compete or even find the time while at uni.

Soon after, the partner split and went on to pursue other ventures. That’s when the idea struck: it’s near-impossible to keep up with every deal from every site each day. In mid-2011, the first prototype for DealWatch was released. At the time, it combined over 30 daily deal sites.

With the prototype underway, the site was initially funded using Google AdSense. One of the biggest challenges I faced was that many of the daily deal companies did not want to work with a young, dynamic startup in a revenue-sharing scheme. At first, DealWatch did not have the traffic to offer them to make it worthwhile. Soon after, the JackMedia affiliate program launched for Daily Deals and this significantly helped the business model.

At the moment, how many people are involved in DealWatch?

For now, it’s just me. I outsource a large majority of tasks via eLance and Freelancer. The cost and quality of the work is of great value, and I can hire a number of candidates to be working on tasks at the same time. Thus, things get done quicker rather than just having one or two specialised full-time employee. I have considered hiring a full-time employee, however the costs cannot be justified – although I predict that with the continual growth we should take on-board a couple of full-time employees in early 2013.

I understand DealWatch is currently expanding into the NZ and UK markets – how’s the progress been so far?

The progress so far has been quite positive. We joined NZ soon after we launched in Australia, but never really did much with it. Just recently, we added all the deal sites and have begun crawling. It seems as though the NZ market is a few months behind Australia in that it’s only now beginning to consolidate. In terms of UK, they are well ahead of Australia, however many shoppers are quite loyal to the daily deal market.

One of the most interesting things is that I can be located here on a desk just south of Sydney, but reach into UK homes. The internet is quite amazing and its potential is priceless.

Other than the aforementioned moves, are there any other DW plans currently being mapped out?

Other than our global expansion, social, mobile and local are all within the top 10. I believe that a website in the daily deal space simply cannot provide full value to customers without these three areas of focus. These three areas are also common across all industries.

Deal sites like GroupOn have been recently getting a lot of criticism for allegedly being non-beneficial to advertised businesses. Do you think it’s a temporary backlash or are the criticisms going to have long-term repercussions for voucher-selling companies?

I believe the claims are legitimate. The primary issue here is that many of these websites are using run-of-the-mill software, template legal documents and some of the managers are not listening to the customers’ needs. A recent study showed that 43% of daily deals are from repeat businesses. I think this goes to show that for some businesses, it works out profitable and for others not so much.

In fact, the other day I went to redeem a massage voucher. The shop attendant did not offer any services, provide detail into the business or ask for my contact details. In this instance, running a voucher at a loss would not be profitable. On the other hand, my partner and I went to a restaurant recently and the business owner offered us a 20% discount if we return a second time. The food was amazing, the service level was above standard and we were compelled to come back. It’s hard to know where this industry is heading, but one thing is certain: if the daily deal providers keep ignoring their customers, they will be gone within the next year. Customers are loyal to websites – which have formed mainly on a level of trust and certainty. Provide a bad experience, and they will not return.

We live in an era of startups. What do you think the climate is currently like in the Australian startup community?

I will touch briefly on this subject as I haven’t had that much contact with other startups. Just recently my local uni – the University of Wollongong – launched an innovative initiative called StartPad that helps provide local startups with a desk and a likeminded community to engage with. This goes to show that the drive and initiative is there – however in comparison to Silicon Valley, it’s a very young community.

In terms of funding, it’s quite limited and hard to obtain. Although the government does provide support, most of the chosen projects are aimed more at industry and public sector projects and less website based projects (i.e. Facebook, Google). One of the biggest issues I find with Australia is that we are a risk-averse nation. In contrast with Silicon Valley, many of the investors here are looking for investments that tailor minimal capital risk with solid and guaranteed business models. A startup that seems too risky investors will avoid at all costs.

Do you have any words of advice for young Australian startups?

Network, network, network. The importance of knowing the right people is by far the key to the success of DealWatch. I regularly chat with industry specialists, competitors and vendors. LinkedIn is a great tool to keep those important connections. Create a LinkedIn group around the industry and keep everyone together. Now that we’re dreaming to live this whole concept of BYOB (be your own boss), it’s important that we connect with the right people – this is invaluable.

A good example of this is that I had no idea about SEO. I went and bought multiple books about it and most of them seemed quite dated and irrelevant as SEO is a rapidly-changing area. However, one of my connections that I met at a conference is an SEO expert. I took him out for a coffee and he brought me up-to-date with all the latest concepts. The information I gained from a short meeting was well beyond what a book could have provided.

Thanks Alex!

by Denis Semchenko

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