Empowering Small Businesses with Deal Umpire

Empowering Small Businesses

© Copyright 2011 Deal Umpire, LLC.

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Group Buying Market Opportunity

>$1B 2010 Industry Revenue
600+ Projected $6B Revenue by 2015
Deal Sites

© Diamond Management & Technology Consultants, Inc.
40,000 U.S. deals
featured in 1Q 2011
Groupon is the “fastest
growing company ever”
Copyright 2011 © Deal Umpire, LLC

“…find inefficiencies,
make them efficient
and take your piece
of the pie…”
– Tim O’Shaughnessy, CEO Living Social

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Group Buying Market Challenges

Deal Sites face Difficult for Deal Sites
difficulty to scale and enter
Differentiating
New Markets

Merchants increasingly
aware of Limitations Favors Consumers
more than Merchants


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Market Inequality Hurts Both Merchants and Deal Sites

• Customer acquisition is highly
• Do I need to run a daily deal to
competitive and expensive.
compete?
• Merchants think all daily deals
• I can’t profit discounting discounts!
are bad for their business
• How do I select a deal site
• How do I differentiate my deal
intelligently?
site?
• Is there any way to profit from
• How can I reach more
running a daily deal?
merchants while remaining cost
• What terms are negotiable?
effective?

How can we
make this market
more efficient?


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What is Deal Umpire?

Before Deal Umpire After Deal Umpire

•Inefficient •Efficient
•Opaque •Transparent
•Chaotic •Organized

Deal Umpire is the world's first online marketplace
where Merchants and Deal Sites come together


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What People are Saying About Deal Umpire

“Deal Umpire May Level
The Playing Field Among
Daily Deal Sites” “Chicagoland Chamber
“Deal Umpire Aims to
of Commerce Gives
Help Small Biz Maximize
Support to Deal Umpire”
Daily Deals”

“Deal Umpire Gives “Deal Umpire, an Ebay
for Merchants Wanting to

Merchants More Control”
use Groupon”

“Deal Umpire: Making “Deal Umpire Will Change
Daily Deals Sustainable How the Nation Does
for Vendors” “How Deal Umpire Is
Business”
Making Deal Biz More
Efficient”

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How does Deal Umpire work?

Post  Merchant posts a deal and creates an auction
Bid  Deal sites bid for merchant's business

Select  Merchant chooses the deal site that is the best fit
Connect  The deal site and merchant connect
Feature  Merchant's deal is featured on the deal site
WIN!  Merchant and Deal Site Both Win!


Merchants come to Deal Umpire for
transparency and power…

..and Deal sites come to find leads
and differentiate themselves to
merchants

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What are the Merchant Benefits?
Transparency
• See how each deal site differentiates itself
• Compare options to make a prudent decision
On every auction, Deal Sites provide
Filter Information critical information is extremely useful
to Merchants, such as:
• Digest all of the information provided by each deal – Revenue Split
site – Payout Terms
• Recognize the differences and save valuable time – Credit Card Fees
– Subscriber Reach
Profitability – Subscriber Demographics
• Create a more competitive market for daily deals – When a Deal can be featured
• Daily deal sites will offer favorable terms to win the – Deal Site Business Model
– Media Coverage
auction – Marketing Materials

Nothing to Lose
• The only cost to the merchant is the $10 upfront
posting fee

Deal Umpire helps merchants make the right
decision by providing a platform to choose the
best deal site partner

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What are the Daily Deal Site Benefits?
Deal Sourcing
• Helps deal sites reduce their sales force by aggregating merchants ready to run deals

Product Differentiation
• Helps deal sites illustrate why they are the right fit for a particular merchant

Bidding Flexibility
• Freedom to customize their bid for each unique merchant criteria

Nothing to Lose
• No fees charged to a deal site unless it is chosen as the winning bidder

Free Advertising

• Familiarizes merchants with a deal site and its product offering

Ease of Entering New Markets:
• Helps reduce the barriers to scale when entering new markets by sourcing deals

Deal Umpire provides a platform where Deal Sites can
differentiate their product and find new merchants


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How Does Deal Umpire Generate Revenue?

• Deal Sites pays $99 fee when chosen as winner of an auction
• Merchants can choose up to 3 winners for each auction

Deal Umpire Projected Revenue
Deals/Week Average Number of Deal Sites Chosen Per Deal Posted Projected Revenue
1 2 3 based on
Number of Customers
25 $130,000 $260,000 $390,000
50 $260,000 $520,000 $780,000
100 $520,000 $1,040,000 $1,560,000

• Assume 50 Deals Per Week
• Assume 2 Deal Sites chosen as winners for each deal

Number of Markets Annual Revenue
Projected Revenue
1 $520,000 based on
5 $2,600,000 Number of Markets
10 $5,200,000
25 $13,000,000
50 $26,000,000


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Deal Umpire Projections & Milestones

Chicago National Market
Multi City
Launch Presence Leader

•Beta version of platform •50+ deals/week in •Launch across all major •Businesses come to Deal
for Chicago only Chicago US cities Umpire to run deals

•Signup 20 Deal Sites and •Expand platform to •National presence across •Deal Umpire becomes a
Merchants support multiple cities all markets deal clearinghouse

•Run 20+ live test deals •Mobile platform for •50+ deals/week in all •Deal Umpire promotes
and get feedback merchants markets deal site consolidation

Summer Fall Summer Fall
2011 2012 2012 2012


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Our Competition

Deal Umpire has
the first mover
advantage in
this space
INVENTORY
DEAL SITES
PROVIDERS

Transparency into Deal Site Offerings

Competitive Marketplace

Merchant Controls Deal Distribution

Deal Inventory


“The strong live and the weak
die. There is some bloodshed,
and out of it emerges a much
leaner industry, which tends
to survive.”
– Ratan Tata

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The Deal Umpire Vision

•Change the landscape of the Daily Deal
industry

•Empower Merchants with Transparency,
Power, and Profitability

•Level the playing field for Deal Sites

•Promote Deal Site consolidation


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The Deal Umpire Team
Ryan Leavitt, CEO
•Bachelor’s of Business Administration from the Ross School of Business at the University of Michigan
•Former financial analyst at Goldman Sachs & Co
•Former management consultant at PricewaterhouseCoopers (née Diamond Management & Technology Consultants)
•Worked with C-level executives and focused on business process improvements for several Fortune 500 companies
•Worked on the core IT integration team for a $3 billion airline merger

Karthik Narayanaswami, CTO
•Bachelor of Engineering from the University of Madras in India and Master of Science from Georgia Tech
•Currently pursuing a Master of Liberal Arts in Government & International Relations at Harvard University
•Management consultant at a leading advisory firm with experience in technology strategy and delivery
•Worked in R&D, including the Los Alamos National Laboratory with several publications and (pending) patents
•Deep technical and entrepreneurial experience as the co-founder of two startups

Jeff Glazer, CFO

•Bachelor’s Degree from the University of Michigan
•Master’s of Accounting from the Ross School of Business at the University of Michigan
•Former accountant at Deloitte & Touche
•Member of an entrepreneurial think tank in Chicago, focused on real estate transactions
•Owns and operates a medical spa in Illinois

Venson Kuchipudi, CMO
•Bachelor’s of Architecture from Andrews University in Michigan
•Co-founded a series of successful software companies whose clients included the City of Chicago
•Former Director of Internet Marketing at Infor Global Solutions, a $2.5 billion enterprise software company
•Developed and executed the global web marketing programs and social media strategies
•20 years in digital marketing experience from both startups to global enterprises


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Deal Umpire Strategic Partnerships

• Official endorsement from • Deal Umpire recommends
Chamber MobManager platform to
merchants
• Powerful and influential members
• Manages merchant experience
• Introductions to business owners after the deal has been featured
throughout Chicago (ex: Gibson’s by deal site and purchased by

Group, Lettuce Entertain You, etc.) consumers

• Liaison to leadership of merchant • Voucher Redemption
associations (ex: National
Restaurant Association) • Deal Analytics

• Introduction to decision makers at • Loyalty Platform – Drip
large national brands and retailers Marketing Campaign


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Lifetime Value of a Merchant
• Deal Sites pays $100 fee when chosen as winner of an auction
• Merchants can choose up to 3 winners for each auction
Annual Revenue Generated from One Merchant
Deals Posted/Year Average Number of Deal Sites Chosen Per Deal Posted
1 2 3
1 $100 $200 $300
2 $200 $400 $600
3 $300 $600 $900
4 $400 $800 $1,200

Lifetime Value Generated from One Merchant
Number of Years Deals Posted Each Year

1 2 3 4
1 $200 $400 $600 $800
2 $400 $800 $1,200 $1,600
3 $600 $1,200 $1,800 $2,400
4 $800 $1,600 $2,400 $3,200

Estimated Lifetime Value of a Merchant is $1,200 over 3 years -
assuming the merchant posts 2 deals each year and chooses 2
deal site winners each time


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Merchant Acquisition Cost

Merchant Acquisition Cost - One Market
Monthly Annual
New Merchants Registered 200 2,400
Fixed Outsourced Sales Cost* $12,500 $150,000
Variable Outsourced Sales Cost ($25/merchant)* $5,000 $60,000
Deal Umpire Customer Service Cost** $3,000 $36,000
Total Merchant Acquisition Cost $20,500 $246,000
Acquisition Cost of One Merchant $102.50 $102.50

Annual Merchant Acquisition Cost - Multiple Market Scenarios
Number of Markets 1 5 10 25 50

New Merchants Registered 2,400 12,000 24,000 60,000 120,000
Fixed Outsourced Sales Cost* $150,000 $750,000 $1,500,000 $3,750,000 $7,500,000
Variable Outsourced Sales Cost ($25/merchant)* $60,000 $300,000 $600,000 $1,500,000 $3,000,000
Deal Umpire Customer Service Cost** $36,000 $180,000 $360,000 $900,000 $1,800,000
Total Merchant Acquisition Cost $246,000 $1,230,000 $2,460,000 $6,150,000 $12,300,000
Acquisition Cost of One Merchant $102.50 $102.50 $102.50 $102.50 $102.50

*Assumption based on outsource sales force current rates
**Assumes one full time Deal Umpire customer service rep for each market


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Deal Umpire in the News

Monday's Musings: Auction Sites Such As Deal Umpire May
Level The Playing Field Among Daily Deal Sites

Silicon City: How two local firms aim to help small biz
maximize daily deals

Chicagoland Chamber of Commerce gives support to local
startup Deal Umpire

How Deal Umpire Is Making Deal Biz More Efficient

Deal Umpire: Making Daily Deals Sustainable for Vendors

Meet Chicagoan Ryan Leavitt, entrepreneur, co-founder of
'Deal Umpire'


Empowering Small Businesses with Deal Umpire

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