How To Monetize a Q&A Site: Answers.com CEO David Karandish (Part 7)

Sramana Mitra: In this strategy of being the a customer service portal for brands, the business model around that is not exactly an advertising business model; it’s more a SaaS business model, isn’t it?

David Karandish: That’s where half of the revenue comes from, but we leveraged the Advertising.com business model to build out the subscription piece. Three years ago, we had no subscription revenue. Today, it’s approximately half of our overall revenue. We were believers in both. We’re not against the dot-com side. We’re really excited about what we can do on the advertising there, but we’re looking at it saying that if we restrict ourselves to just Answers.com, we’re missing a big market where some of the most commercial questions and answers are available—or should be available—on some of the top websites of the world.

Sramana Mitra: My observation, listening to you, is that your direct sales force is more effective in selling the SaaS business, really.

David Karandish: Well, we have 75 people in SaaS; we have 3 people in direct ad sales today. We’re building out both sides.

Sramana Mitra: Why doesn’t Quora monetize?

David Karandish: I don’t want to speak for Quora because they’ve been at this for a long time. Someone there must think that not monetizing will help them raise bigger and better capital rounds is my guess.

Sramana Mitra: How can that possibly be?

David Karandish: Again, I don’t want to speak for them. For us, we’re trying to build a business that works really well at the precipice of a bull market, but we also are trying to build a business that works extremely well at the bottom part of a bear market. In bull markets, someone would argue that it’s good to raise capital based on eyeballs and non-monetizing metrics until that market shifts, and you go into a bear market and people start to say they’re really only interested in something that has a path to revenue or a path to profitability.

For us, we’ve always said that we want to build a business that does both: has great scale, reaches a lot of consumers, and at the same time is generating lots of revenue and lots of profitability no matter what the market looks like.

Sramana Mitra: You are still private, correct?

David Karandish: We’re still private.

Sramana Mitra: What is your game plan?

David Karandish: We’re continuing to build out Answers.com and our syndicated SaaS platform. Through that, there are a bunch of products that we are enhancing and are going to be launching over the next few years. Along the way, when we find a company that could help us accelerate that product roadmap, we’ll look at those companies and say this could be an interesting acquisition for us.

Over the next few years, you’ll see us continue to grow and improve our existing website and syndicated software platforms, and you’ll see us go out and acquire additional dot-com and SaaS companies.

Sramana Mitra: Is there anything else you would like to add?

David Karandish: The only other thing I’ll say is we have a fantastic team at Answers.com. I’m sure everybody says that, but in a very short period of time, we went from a couple of high school buddies to over 600 people in the company, which has been a pretty cool ride to see the growth and the trajectory as we’ve been able to build out.

Sramana Mitra: Where are the 600 located?

David Karandish: We’re headquartered in Saint Louis with about 30% of employees. The rest are spread out amongst our other 11 offices. We’ve an office in the Silicon Valley in Mountain View. We’ve offices in New York City, Ann Arbor in Michigan, Cleveland, Atlanta, London, Beijing, Tel Aviv , and a reseller partnership of our relationship down in Sao Paulo. We’re all across the world.

Sramana Mitra: What scale are you at?

David Karandish: North of $200 million in revenue.

Sramana Mitra: And you’re profitable?

David Karandish: Profitable, yes.

Sramana Mitra: Well, congratulations, it looks like you’ve navigated very well. I’m in your camp; I don’t particularly like businesses that play the speculation game. I’m more of a disciplined entrepreneur executing with real fundamentals kind of person, so I like your story. Thank you.

This segment is part 7 in the series : How To Monetize a Q&A Site: Answers.com CEO David Karandish
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