Bio: Eli Portnoy is the CEO of ThinkNear, a company that helps local merchants increase profitability with a yield management solution. The company’s product automatically predicts slow times and creates hyper-local offers and discounts to attract customers.

Eli was most recently a senior product manager at Amazon where he helped develop, market, and grow the Amazon Video On-Demand service. Previously he was a successful entrepreneur selling an automated telephone-based recruitment platform to local merchants and was named one of the “Top Young Entrepreneurs” by BusinessWeek, the “21st Coolest Young Entrepreneur” by Inc. magazine and a “Top Entrepreneur Under 30” by the New York Daily News.

NTT: Can you tell us about how ThinkNear works?
Portnoy: We’re a mobile marketing engine for local businesses. We help them get more customers in the door at the right times. What makes us different from anyone out there is we automatically figure out when a business is busy and when a business is slow, and we tee off marketing decisions based on that. So a merchant doesn’t have to do anything. We are consistently optimizing to make sure that we’re sending them the right customers at the right times.

NTT: You have worked with local merchants before. What gave you the idea for ThinkNear?
Portnoy: In 2005, I started a business to help local businesses recruit. And when I would speak to the local businesses, which I did pretty much every day, I always heard, “yeah, recruiting is an important piece of our business. But the real key component is getting customers in the door at the right times.” That just resonated with me. As I went through business school and I spent time at Amazon, I started thinking about how big companies were using very sophisticated technology to change the price of their goods to maximize revenue. Consider airlines—they change ticket prices all the time.

And I thought if this could be applied to local businesses, it would be revolutionary and would really help improve their businesses. It was just a matter of taking that kernel of an idea and figuring out a way to package it and simplify it so that the local mom-and-pop shops could use our technology.

NTT: Companies that help drive foot traffic to local businesses seem to be all the rage right now. Why do you see local commerce as the next big thing?
Portnoy: I think there are a bunch of reasons. The first is that local is a trillion dollar opportunity. If you look anywhere, any corner of the United States, you’re going to find local businesses. And so helping them drive traffic is a really big opportunity.

You know for the first time, over the last three or four years, we’ve started to see the online world and the offline world merge. Groupon is a great example. They use online tools, techniques and technology to actually get customers from online to go into a retail store. And that’s phase one, and they’ve done it so successfully and they’ve grown so quickly that it really has proven that there’s a big opportunity there.

From our perspective, what Groupon has done is the very beginning of merging online and offline. The next phase is to take an analytical approach, a smart approach, a data-driven approach. Sort of the same way that the Internet went from a very unsophisticated place to a very sophisticated medium, we think that this online/offline world will also change very dynamically. We want to be at the forefront of this and really bring some of these optimization technologies to this new and emerging field.

NTT: ThinkNear combines geo-location with mobile banner ads to push special offers to nearby customers. How important was explosion of smart phones in driving traffic to local businesses?
Portnoy: Smartphones are an incredibly transformational technology. For the first time, everyone has their entire computer in their pocket. And so they’re making decisions that they were never making before in real time with access to an incredible amount of information. So that’s a really, really interesting possibility as a marketer.

The second thing is that phones allow you to be very precise in understanding, as a marketer, where that customer is. So when you combine the fact that people are making decisions on their phone while on-the-go and the fact that, as a marketer, I can tell exactly where they are when they’re making that decision, it becomes an incredibly powerful tool to drive customers into actual bricks-and-mortar stores. We tested a whole bunch of marketing channels in terms of sending customers into a store, and there was none that was more effective than mobile. We’ve really doubled and tripled down on mobile. We think that the proliferation of smartphones completely enables our business.

NTT: How receptive are customers to these targeted mobile ads? Are they as open to receiving these offers through mobile apps as they are to receiving daily deals in their inbox?
Portnoy: I think customers understand that a lot of the content they consume for free is subsidized by ads. If they go to espn.com or weather.com or a lot of the different mobile applications that people are using, they’re seeing ads. All we’re doing is replacing an ad for something that is very irrelevant in the mobile space, maybe a brand advertisement or a car, things that you’re just not going to interact with on your mobile phone, with a local offer for something they can do right then and there nearby. So the response we’ve seen is, hey, this is actually kind of cool. This ad space that I was going to have anyway no longer talks about something that’s not relevant to me, now it’s something that’s actionable, and I’m getting a discount. So people seem very excited about having ads for local offers show up on their phones.

NTT: It seems like competitors are trying to offer similar services, with Groupon Now and Groupon Mobile, for instance. What makes your service different?
Portnoy: There are three basic ways in which we are different from anyone else in the market. The first is that we are completely easy to use. You sign up once as a merchant, and you never have to touch anything again. We manage everything for them.

The second very big component is that we are consistently optimizing. We’re figuring out when to make the discounts, how much to make those discounts for, and where to fill those discounts. We’re able to use very fancy mathematics to make sure that we are advertising at the lowest cost possible and at the lowest discount possible to drive customers in the door. That optimization to get the right customer at the right time at the right price is really critical. It makes for more profitable business for our merchants.

The third is that we don’t have a mobile app that ours; there’s no ThinkNear app you can go to and download. Instead, we work with all of the different applications, ad networks, and people who are really focused on the customer experience, and we serve our ads through them. What ends up happening is that we have a huge distribution outlet. We have the potential to reach almost any consumer anywhere they are. That gives us a reach to get to more consumers, and therefore drive more consumers to a local business than any single player in this space can do on their own.

NTT: That’s interesting. So customers don’t actually opt-in to this service. They just see your ads based on the applications and sites that they’re using.
Portnoy: That’s exactly right. We very consciously decided, in such a difficult market when there are so many challenges, we were going to specifically focus on the merchants and add value for them. And we were going to outsource or work with partners for every other piece. We really wanted to be hyper-focused on providing an exceptional experience for the merchants. That’s been something that we consciously decided on day one.

NTT: Does your service supplement or replace offers to customers who check in to a merchant on applications like Foursquare?
Portnoy: Merchants need to be really aggressive about how they’re finding customers. There are just so many different channels and opportunities now. What we do is we offer a one-stop-shop where they can get a tremendous amount of optimized impressions across a whole bunch of different places. If they still want to be more aggressive, if they think that’s not enough, there are lots of different channels they can go to. It doesn’t have to be one or the other.

NTT: For the last couple years, people have been talking how mobile geo-location holds the power to transform local business. Do you feel like we’re just scratching the surface of what these combined tools can do for local merchants? What more do you think is possible?
Portnoy: I really do think we’re at the very beginning of this new revolution. I think certain companies have proven that you can get customers into a store from online. Now it’s just about making that experience smarter and better. There are so many different things that can be done. The explosion of mobile phones just facilitates that. I think there’s a lot more to come.

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