Building a Virtual Company to $20 Million: Rob Cheng, CEO of PC Pitstop (Part 4)

Sramana Mitra: So, just give some metrics of how it took off. What kind of numbers were you doing? How long did it take you to get to a million in revenue for example?

Rob Cheng: In the very beginning, we had no revenue model. Revenue was not important at that point in time. It’s much more about how many users you had and whether that was growing. Revenue didn’t matter at all. So we didn’t have any advertisers.

When we started, there was no way to make any money. We did start allowing advertising. We created numerous relationships, one was with PC World. They had an ad network that they pushed through to us.

We were reselling various products. We sold anti-spyware, anti-virus, and defragmentation software. In 2003, we started making our own software. It ramped before that through the advertising, we were over a million dollars a year.

Sramana Mitra: So, you started in 1999. By 2002, you were already doing a million dollars a year through advertising just doing this free PC diagnostic , and then monetizing that with advertising. Then in 2003, you start selling your own software.

Rob Cheng: There’s a little more to that. One important fact is that 2001 was when everything crashed. The internet bubble crashed. That affected us. That’s when we pulled back. So between 1999 and 2001, we had hired some people. We ballooned up to maybe six people with no revenue model. But then after that, we went down to three people.

In early 2002, we were profitable because I said, “We can’t build this way. We have to go and live within our means.” By the end of 2002, we did a million. We were focused on revenue then. Back then, it wasn’t that hard because we had a high-volume website just to find a few products that people needed.

For example, back then defragmentation was a really big deal because Windows didn’t do it. Therefore, when we found fragmented systems, we would just say buy the software. Our software partner was Executive Software. We probably sold over a million.

Then, we sold anti-spyware and anti-virus. When we find a virus, we would say, “Do you need an anti-virus?” It went on like that. There were numerous companies with partnerships like that.

Sramana Mitra: By about 2005, how many people were you up to?

Rob Cheng: The time I would go to now is 2003. One of our big partnerships was in advertising and with registry cleaners. So, people wanted a product that will go and optimize and maintain their computer. In 2003, we came out with our own product that was called Optimize. That greatly changed everything. Rather than be a website reselling products, we now are selling our own software. That greatly helped the company and accelerated our revenues.

In 2005, we made $5 million. That really changed the direction of the company. We’re no longer a website. We’re going to invest in software development. I started hiring more developers.

This segment is part 4 in the series : Building a Virtual Company to $20 Million: Rob Cheng, CEO of PC Pitstop
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