Case Study Number 8: BeatThatQuote
BeatThatQuote was a British-based priced comparison website specialised in personal finance products. The company launched in 2005 and invited consumers to share their personal data in exchange for cash back and discounts. The company essentially redistributed wealth through its incentivisation process and financial intelligence.
Ariadne Capital founder and CEO Julie Meyer first met John Paleomylites, managing director of BeatThatQuote, in 2006 in the early years of his business. The company had been named Young Company of the Year by the Growing Business Awards. Three years passed before Paleomylites reached out to Meyer when Google’s Head of Corporate Development in Europe Anil Hansjee was expressing interest in BeatThatQuote. At the time, Google was moving into vertical search tools eventually acquiring travel firm ITA Software in April 2011 for $700m. Google had not made a large acquisition in the UK at that time.
Ariadne Capital was the sole financial adviser to BeatThatQuote on its sale to Google - managing the sell-side M&A mandate and setting the company’s valuation to £100m at an early stage in the negotiations. Paleomylites accepted an offer for £37.7m, which was a 122 EBITDA multiple (BeatThatQuote had £250k of EBITDA). Paleomylites went on to work for Google for two years, directly reporting to Larry Page.
BeatThatQuote exemplifies Ecosystem Economics:
1. BeatThatQuote was a Digital Enabler to large non-tech traditional businesses – its customers who included the Daily Mail and Argos - who needed to build digital revenues
2. Consumer Data drives all applications in the digital world. The more large enterprises incentivise individuals for the use of their data in order to determine consumer intent and consumer segments, the faster they will shift to a digital-centric future.
3. BeatThatQuote also exemplifies how Digital Enablers get acquired for their Strategic Value (the left side of the David & Goliath Grid) as it had low Financial Value, but enabled Google to achieve its goals in vertical search diversification
BeatThatQuote’s business model of incentivising individuals for the use of their consumer data in order to have better insights into their choices and needs enabled the company to provide a wealth of information to people while generating leads for businesses that they engaged with. Ecosystem Economics is fundamentally a sharing of profits of a transaction across multiple parties. BeatThatQuote implicitly did this ahead of the market with the effect of creating strategic value for Google and positioning itself for a larger exit than would have happened given their financial profile.