Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 4)

Sramana Mitra: What I’d like to do next is to track the major strategic moves that were responsible for that growth to the extent that you can remember them.

Avi Steinlauf: There are two major things that I would refer to. I sometimes refer to these as the business model and the evolution of the business model. Let me talk about those two. Essentially, I mentioned that from the earliest days on the web and the gopher site before that, we made our information available for free. We built up a fairly large audience. As a result of having the audience, we got a call from a gentleman by the name of Pete Ellis. Pete was an auto dealer here in Southern California who had sold off his dealerships and had started a business called Autobytel. The premise of the business was that he had dealers around the country who wanted to sell cars to people who were doing research on the web.

He said to us, “You have all of these shoppers on your site doing research about all of these types of vehicles and I have all of these dealers around the country. Why don’t we put your shoppers in touch with my dealers? I’ll generate free price quotes for them for the vehicles that they’re searching for. They might find a great utility in that. On top of that, I’ll pay you for those leads.” We signed an agreement in 1995 whereby shoppers on our site received free price quotes for the vehicles they were searching for from the Autobytel dealers. That’s really how we came upon the beginnings of a business model.

Over the years, we worked, not only with the folks at Autobytel, but a number of what we would call, third party lead aggregators in the business. We also worked with a number of the automotive manufacturers who had lead generating arms and were able to provide the shoppers on our site with the ability to get free price quotes from dealers all over the country. At one point, I think we had close to over 30,000 dealers that our shoppers could get free price quotes from.

That became a very lucrative source of revenue for the business. In a way that was Internet-revenue. We still had the print publication. We still sold the books but as the Internet side of the business began to grow, it quickly dwarfed the size and the opportunity for the print publications. That was the beginning of the Internet business model.

This segment is part 4 in the series : Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com
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