Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 7)

Sramana Mitra: Does that mean that you can charge higher rates for the leads? Are you even able to take a transaction commission? What does that give you in terms of financial metrics?

Avi Steinlauf: All of the above. It allows us to work much more closely with our partners, and depending on the individual relationship, allows us to just just have a much better sense as to what’s going on. In a way that works better for us and our partners, and candidly, better for our shoppers, because it provides them with a better solution.

Sramana Mitra: What about your strategies for acquiring traffic? I understand that you have relationships with the manufacturers and direct relationships with the dealerships? What is the strategy in acquiring the consumers?

Avi Steinlauf: We’ve always been very fortunate because we have such a huge amount of rich and deep original content on our site. The search engines have treated us fairly well in an organic fashion because a lot of the information that we have is original information. We’re not acquiring editorials or reviews from other places. We’re generating it all in-house. That has allowed us to build up a pretty good ranking from an SEO perspective. We have been very aggressive over the last 10 plus years on the SEM side where we’re working with the big search engines to acquire traffic for people who are researching and shopping for cars and trucks, new and used online.

Because we’re a brand that’s been around since 1966 and we have a pretty good profile, we’ve been able to attract an audience organically through the exposure that we get and the consultations that we do with the media. We’ve got a couple of analysts who work as resources for folks in the business media. All of those things have allowed us to build the brand on the Internet.

More recently, ever since we’ve been working closely and directly with dealers, we’ve begun to experiment with traditional advertising spending as well. Last year, we had a television campaign for the Edmunds brand during the first quarter. We’ve had quite a bit of radio. This year, our focus is more towards radio. Those are some of the examples of marketing initiatives we have under way that have helped us build and solidify the brand that we’ve built. It has not been a quick hit by any means.

Sramana Mitra; Where are you today in terms of scale? I know you are a private company but whatever you feel comfortable disclosing, can you give us some metrics or ranges on where you are?

Avi Steinlauf: We have about 600 employees at the company. We are a profitable business with the desire to continue to grow. We’re a growing business. We’re growing at double digit percentage rates on a go forward basis. Those are some of the things that would indicate that we are very much a growth-oriented business. From a revenue perspective, it’s well into the nine figures. It’s not a small business.

Sramana Mitra; If you were to be valued either in the public market or in a private round, would you qualify to be a billion dollar unicorn company?

Avi Steinlauf: I guess the definition of a unicorn is in the eye of the beholder perhaps.

Sraman Mitra; Is there anything else that you want to add?

Avi Steinlauf: A couple of things that we haven’t spoken about that I think differentiates us and that would really fit with the audience is that as we’ve built the business, we thought a lot about the culture that we have here. That has been a material differentiator between us and some of the other folks who might be considered our competitors both in the industry and outside the industry when competing for talent. The fact that we’re a privately held business has allowed us to do some things that I think will be more difficult for other types of companies.

I’ll give you two examples. The first one was how we weathered the recession back in the 2008 to 2010 period. In this country, we went from selling 16.5 million new car units a year down to 10.4 million in the course of 18 months. That’s how the auto industry felt the recession. Obviously, we felt that quite acutely. We had a couple of our biggest clients go through Chapter 11 bankruptcy. We made the strategic decision at that time, as difficult as it was, that while we needed to conserve our cash and shrink our expenses, one way we were not going to do that was by letting go of a large swath of people in the company. We held on to our people as we have in other difficult points in time because we knew when we came out of the recession, we were going to need these people. We didn’t make a short-term decision that tactically may have made sense. We were perhaps different than some other at that time who did let lots of people go. I think that paid off for us in that we were able to grow more rapidly in the 2011 to 2013 period than we would have, had we had to find new people.

Sramana Mitra: How badly was the business hit?

Avi Steinlauf: It was hit pretty badly. I have to think in terms of percentages. We probably saw a 20% hit to the top line of our business over a short period of time. It was difficult. It’s easy to tell the story in hindsight but we were sweating through that period of time knowing that we were making what we thought were the right decisions. They were tough decisions to make. We wanted to do what we thought was the right thing. That doesn’t minimize how difficult it was at that time.

Another one of the things that I think differentiates us from some of the employers in our area is that we adopted something called the results-oriented work environment about three years ago, where we got rid of the concept of vacation and sick time. We now provide an unlimited amount of vacation or sick time to our employees. They have no requirement to log in and log out of the office at specific points in time as long as they’re getting their work done and as long as they’re showing the results. That’s been a tremendous boon for our population where people really enjoy and appreciate being treated like adults and not told when they need to be here or leave. It’s just very consistent with the way we see the world and the way we run our business.

Sramana Mitra: Very cool story. Thank you Avi.

This segment is part 7 in the series : Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com
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