Internet daily deal company grows quickly

Gary Lipovetsky
Gary Lipovetsky

As businesses go, Dealfind is not exactly recession-proof, but it’s as close to recession-proof as you’re likely going to get.

As its name suggests, the online service offers its customers baaeen up and running, Dealfind has grown between 10 and 20 per cent – per month! Revenues are well into the seven figures and the privately held firm has multiplied its staff by a factor of more than 10, adding experienced administrative and sales people.

Gary Lipovetsky and Mike Tulman, who both had extensive experience in the commercial Internet space, founded the firm with the idea that they had to distinguish it from other Internet discount sites, like Groupon. They did so by coming up with their “ambassador” program in which customers who purchase vouchers for goods or services can themselves receive even greater rebates if they sign up their friends to make the same purchase. People do so through Facebook, Twitter, e-mails or, shock of shocks, word of mouth. “We pay our customers to tell their friends,” Lipovetsky told The CJN.

Dealfind pays out more than $100,000 a month on the program.

Lipovetsky believes Dealfind has found a unique niche in bridging the space between merchants and consumers. Consumers love the discounts on everyday items, they are flocking to recruit their friends, and merchants are willing to discount their products to get new customers in the door. “Loss leaders” are as old as retail, said Lipovetsky, and they still have the power to entice customers. Once they’re in the shop, restaurant or store, they typically increase their purchases or, in a best-case scenario, become repeat customers.

“This is a great marketing tool for merchants,” said Lipovetsky. “It’s a lot less risky [and costly] than traditional media like TV and radio.”

With a product line that has included spa treatments, laser hair removal, get-away packages and house cleaning, it’s clear that women make up the bulk of Dealfind’s demographic. Lipovetsky said research shows 70 per cent of Dealfind’s customers are women, though often they make purchases for their male partners, obtaining for them subscriptions to men’s magazines or furnace cleanings.

“I think women are more responsible than men. They want a good deal. They’re more responsible and more frugal,” he said.

Last week, Lipovetsky told the Dealfind story to a meeting of the Canada Israel Chamber of Commerce. He has become more emotionally tied to the Jewish state over the past few years, following several trips there, and his fiancé is Israeli.

A couple of years ago he attended the Affilicon trade show in Israel, which bills itself as exploring the latest trends in “affiliate marketing” in social networking and Internet technologies.

Afterwards, he and a friend spent a week touring the country.

Lipovetsky, who grew up in the Bathurst and Steeles area and counted many Israelis and Russian-Israelis as his friends, said he felt right at home in Israel.

He did not discount the possibility of one day doing business there.

In the near term, however, he has his gaze set firmly on North American expansion. So far, Dealfind has a presence in more than 40 Canadian and U.S. cities.

Its main merchant partners remain small to medium-sized businesses. It’s a real “people business” and it’s easier to interact with someone running their own shop than dealing with layers of corporate bureaucracy common at blue chip companies, Lipovetsky said.

Still, Dealfind has added many sales people – its overall staff has jumped from 25 at inception to 275 today – and they’re trying to make inroads with larger firms.

Dealfind has also added experienced staff to its “C suite” – top level executives such as the CFO – who came to Dealfind from such notable companies as Lavalife, IBM, MTS Allstream and Bell.

Dealfind is able to recruit top tier talent because of a recent infusion of $31 million. The success of the company has attracted the attention of a number of venture capital funds, including Insight Venture Partners, a New York-based company that was the first to invest in Twitter; the Ontario Venture Capital Fund, a government/private partnership, and Georgian Partners, a Toronto venture capital firm.

In addition to upgrading the company’s management, the funds are going to increase Dealfind’s media presence.

Jeff Lieberman, managing director at Insight, said on making the investment: “We were impressed by Dealfind’s solid business model, calibre of their clientele, and the speed with which they have become the number one daily deal company in Canada. Our decision to partner with these Canadian entrepreneurs was an easy one to make.”

Despite the infusion of cash, Lipovetsky and Tulman, who co-founded another online company, MenuPalace.com, in 1999, retained control of Dealfind’s shares and its board. Still, the presence of venture capital angels has proven a boon to Dealfind, and not just due to the cash, Lipovetsky said.

“Our interests are aligned,” he said. Insight is so well respected and influential that with one call, they can arrange introductions in places where Dealfind is unknown; they provide valuable advice; and, generally, open doors that would be closed to them.

“It’s impossible for an entrepreneur to know everything about everything,” Lipovetsky said. “My advice to budding partnerships is take the smart money; that makes all the difference.”

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