Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 2)

Sramana Mitra: So you’re not a founder of Edmunds?

Avi Steinlauf: I’ll tell you a little bit about the history of Edmunds. I think you’ll see it interwoven with some of the things that I’ve mentioned earlier. Edmunds is a majority-owned family business. It’s my family. My father, Peter Steinlauf, who is our active Chairman, was a serial entrepreneur. He built up outdoor advertising business in the ’70s. Then there was some industry consolidation in the 1980s. He sold his business and was looking to get into another business.

He came across this small print publisher called Edmunds that published quarterly pricing guides for new and used cars that were sold in bookstores and in news stands. He went ahead and bought the company. At that time, there were a handful of employees based in Long Island. He was based in Southern California and he had an editor who was based in Colorado. Essentially, it was a profitable little print business. The business continued as it had for many years before that. He bought the business in the late ’80s, continued through the end of the ’80s and the early ’90s when a couple of people working on the business started dabbling in what were new technologies.

First, they took some of the information that we had about the new and used cars and trucks and printed it onto a CD-ROM and attached the CD to the books. People who were utilizing the books would have the opportunity to pop the CD into their computers and be able to access the pictures and information that way. Shortly after that, they were approached by some folks who had an early Internet company called the Electronic Newsstand.

When I say early Internet company, it’s before the web was very popular. There was something called gopher, which was a textual interface into the Internet. The business model of the Electronic Newsstand was one where they provided articles from publications free of charge to people who access the gopher site. Think about Businessweek, Newsweek, or The Economist who were providing free articles with the idea that people would go ahead and subscribe to the actual print publication.

They approached us and said, “We don’t have any automotive information. Would you like to participate with us?” We said yes. We had a profitable print business. This thing called the Internet was a technology thing. Nobody was really thinking about the future of business models along those lines. We gave them a floppy disk of our information and then continued to update it for them. What we found was people accessing this gopher site, many of which were using dial-up modems at that time, were accessing the information that we provided for free on the gopher site.

To put it into perspective, back in the early ’90s, people who were dabbling in the Internet were charging for their information. They weren’t making it available for free and built up a fairly large audience. After about a year of being on the Electronic Newsstand, the folks who ran it came to us and said, “We like you guys but you’re generating too much traffic for us. We can’t handle the bandwidth and we’re not really making any money off of you. Why don’t you go up and do your own thing?” We said, “No worries.” We put up our first website in the 1994 to 1995 timeframe and as I mentioned earlier, made the information available for free and began to generate a large and robust audience of automotive shoppers who were interested in accessing our information on both new and used vehicles.

Over time, we added quite a bit more information about cars and trucks beyond just the prices and specs to things like options to include, editorials, road tests, and comparison tests. I would say the rest is history. Not to short-change it, I’ll tell you a little bit more about how the business itself evolved on the Internet. But that’s a little bit of a snapshot as to how we began.

This segment is part 2 in the series : Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com
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