Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 6)

Sramana Mitra: Did you have venture capitalists in your early rounds?

Avi Steinlauf: There were some small venture funds that were portions of larger companies but none of the blue chip VC funds that you would be familiar with today.

Sramana Mitra: When you were raising money at that time, was this part of the conversation—that the family plans to keep majority ownership of the company and you wanted to keep the company private?

Avi Steinlauf: I’m not sure how evolved our thinking was at that time. We didn’t quite know what was in store for us. We were in an environment where all sort of things were going on. I think the same values were in place then that are in place now. The long-term orientation was in place, but I’m not sure I could say that we had the understanding that we do today 17 years ago.

Sramana Mitra: That’s a good discussion. A lot of people start without knowing where they want to go because there’s a lot of learning involved in all this as well. I’m sure you, as a young professional, were feeling your way around trying to figure out where you wanted to go. That’s very natural in the lives and journeys of entrepreneurs. That lack of clarity and a less evolved thinking is very normal and very usual in that stage of the game.

Avi Steinlauf: Absolutely. The point that I would make though is that having a long-term orientation and having the values that we had were things that have been consistent over the years.

Sramana Mitra: Let me switch gears to a different topic. How did the competitive landscape around you evolve from that late ’90s timeframe to now?

Avi Steinlauf: It evolved to an extent where many of the players who were around in the space are still around. There have been some who have come and some who have gone. Many of the players continue to be there. What we’ve seen is that as the marketplace has evolved and as the things have been very frothy out there, we see some of the folks in our space jumping at that.

During the recession, things were completely the opposite. We saw a washout of some of the lower quality players in the space. In our category, there are few, including us, who have been able to weather the ups and downs over the years. We tend not to look and think about what’s happening on a quarter-to-quarter basis and what’s in vogue at any given moment. We’re obviously aware of those things but those aren’t the things that guide us. It tends to be a longer-term orientation that we think will play out very positively for the company.

Sramana Mitra: Has your business model expanded beyond pure advertising and lead generation?

Avi Steinlauf: We had a major change in our business back in 2010 or 2011 where we decided that we no longer wanted to be represented by third parties to the dealership community. We wanted to develop the relationships directly. We made a rather large investment for the business in hiring out a team of sales people distributed around the country. We then built out an infrastructure here in Santa Monica to support the people out in the field so that we can being to have direct relationships with dealers all over the country.

Over the last few years, we have been successful in building that out. Today, we have relationships with 10,000 franchise dealers around the country. That’s been a major change in our business. It’s helped us improve the margins on that business by not involving a middleman. It helped to deepen and solidify the relationships that we have with our ultimate customers in those dealers around the country. We continue to work with the automotive manufacturers and their ad agencies. Those have been long-standing relationships. I would say that the business has evolved and is continuing to evolve as businesses like us need to.

Sramana Mitra: Even though you have changed the model of how you sell to these dealerships, the model is still advertising and lead generation, isn’t it?

Avi Steinlauf: Yes, but we’re now able to refine and look at the actual sales that occur as a result of those leads whereas in the past, we understood that we sold the lead and that was it. Whatever happened, happened. Today, we’re working much more closely with our partners to ensure that the shoppers on our site are able to consummate purchases with the inventory that our dealer network is displaying to our audience.

This segment is part 6 in the series : Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com
1 2 3 4 5 6 7