Capital Efficient Entrepreneurship: Ranker CEO Clark Benson (Part 3)

Sramana Mitra: What was the business model?

Clark Benson: We were living a little bit in a vacuum. The company had moved back to Chicago. I was in LA. I wasn’t very well networked in the Internet space at that time. There were very few internet companies in Chicago. My co-founders were not very well-networked. We turned eCrush into a PG-13 match.com for teens where you can not only find people you had a crush on but you could also reach out to other people. We did it in a way where there weren’t any safety issues.

We would get users to unlock features. If you wanted to unlock a feature, you would have to jump through a hoop. We made most of our money from market research companies. We would get paid by sending users through a funnel to fill out a survey. That became relatively profitable. When we sold, it was on an EBITDA multiple. At that time, I wasn’t allowed to disclose it but we sold for a reasonable amount because we had only raised $900,000. I had an exit that closed on New Year’s Day 2007. I left the company after the exit.

Sramana Mitra: What did you do next?

Clark Benson: I took most of the year off. I got married. I spent a little bit of time in my other businesses. I relaxed because I had been working 80 hours a week. When I sold my company, I was 38. I took a year off because I had been working crazy hours since I was 23. I’m a big fan of consuming lists. There was a book called the Book of Lists that came out around 1979. I must have read that book and its sequels about 10 times.

At that time, there were lots of blogs on the web. Some blogger would be writing, “Here’s the 20 best comedies of the decade.” But it was always one person’s opinion. There were two things that I saw that were creating a hole. One was that it was always one 23-year-old blogger’s opinion. The second issue is that five-star rating systems aren’t very efficient. If I just wanted to know what is the best thing in a given category, I don’t want to read the messy user-generated reviews. Five-star rating systems tend to cluster everything at about 3.5 to 4 stars.

My concept for Ranker, which we’ve never pivoted off of, was to create a platform that uses lists to crowdsource rankings across any topic that is worth ranking. I started working on that company. One of my biggest regrets as an entrepreneur is that I should have taken more time off after I sold my first company because you tend to forget how all-in you have to go. With Ranker, I was like, “I’ve had a prior Internet success. I’ll be able to raise money pretty easily.”

A small bubble was already starting to form around 2006 to 2007. Myspace had just sold. People were creating social networks for cat lovers and stuff. I was probably a little arrogant. I opened an office in April of 2008 and started hiring engineers. I’m not an engineer. I’m more of a product and finance person. I always like to bet on myself. I have no problem putting my own money into my businesses. I put half a million into starting Ranker so that I wouldn’t need to deal with the headache of raising money.

I started working on it. I made bad engineering choices while building the first version of Ranker. We ended up not building an MVP. We built a production-ready site, which instead of taking six months to build took three times as long. I had to get rid of a number of bad engineering hires. I could have taken $300,000 of my own money and lit it on fire and I would have had a better outcome because I wouldn’t have wasted any time.

If you recall right at the end of 2008, the economy collapsed. We went into a deep recession. If I had gone and spent time upfront in raising money at the beginning of 2008, I might have been able to raise money just on a deck and an idea. Maybe not. I wasn’t very well-networked. I didn’t know any VC. By mid-2009, we were getting ready to launch. The half million that I put in has already turned into a million.

Half of my money from the exit evaporated in the stock market. I found myself back to having to work every waking hour for a long time. From October 2008 up until 2011, I was back working 90 hours a week. It didn’t look like I had a choice because when I started Ranker, I was like, “You can take a shot at this. If it fails, you got some money to fall back on.” But I didn’t have as much money to fall back on. We didn’t raise outside money. We raised some angel money in mid-2010. We didn’t raise our first venture money until April of 2011. We launched Ranker and Ranker did grow from the beginning.

This segment is part 3 in the series : Capital Efficient Entrepreneurship: Ranker CEO Clark Benson
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