Private Equity to Spin Out Constant Contact

Web hosting holding company Endurance International Group acquired Constant Contact in 2015 for roughly $1 billion. The latter was supposed to add new marketing capabilities to Endurance's hosting services. But yesterday, Endurance's private-equity owner, Clearlake Capital, announced Constant Contact would be spun out. Clearlake also said it was buying and creating a new entity called Newfold Digital, to be run by CEO Sharon Rowlands. Newfold Digital says it has 6.7 million customers.

Our take:

  • While the Constant Contact acquisition made sense on paper, Endurance couldn't effectively leverage it for SMB hosting customers.
  • Jettisoning the business is reminiscent of Intuit selling Demandforce in 2016, because it couldn't fully integrate the SMB marketing provider.
  • Newfold Digital CEO Rowlands knows the SMB space well; it's another thing to deliver marketing services at scale (without heavy churn).

Nearby: Is It the Next Etsy or Patch?

Consumers are interested in supporting local SMBs but are shopping more online. They're also diversifying away from Amazon, which saw revenues spike but lost market share this past year. Now, former Twitter and Slack executive April Underwood has launched Nearby, based on an earlier proof of concept site in Oakland, CA. Nearby is a national-local shopping destination helping SMBs sell products online. It's also "e-commerce in a box." The company offers marketing, order processing and fulfillment services.

Our take:

  • Etsy is an SMB commerce success story; Patch was a failed local news network, which sought to fulfill a clear need but couldn't pull it off.
  • Nearby's vision is extremely ambitious; it's like the e-commerce version of Nextdoor, which is a potential suitor.
  • There are lots of SMB e-commerce enablers, including Shopify. Nearby will need money and patience to succeed. But it's possible.

Privacy Inertia: Consumers Worried but Don't Do Anything

Consumer surveys reveal growing concern about digital privacy, but often a corresponding lack of action. Startpage found 72% of US survey respondents "very concerned" to "extremely concerned" about online privacy. However, most of these concerned consumers don't protect themselves. A 2019 survey found something similar: 92% worried about privacy, only 20% took action. But despite evidence of growing privacy concerns, marketers insist consumers value "personalization" above almost all else.

Our take:

  • Yes, consumers want relevant content but not at the expense of privacy.
  • One reason people may not take action is because it's often confusing, burdensome or complex to do so. (See: GDPR, CCPA.)
  • This is why Apple's tracking consent opt-in is so interesting; it's easy to understand and puts the burden on the developer not the consumer.  

Short Takes

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