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Interview with Bob Rosenschein, CEO of Answers.com

Bob Rosenschein, CEO and Founder of Answers.com shares his insights into how a name affects a business, changing from a subscription to a free model, how necessity drives entrepreneurship, and what truly drives users online.

Interview conducted by Nathan C. Kaiser on Thursday, July 13, 2006 in Jerusalem, Israel.

Bob would you mind giving us an introduction to your Answers.com?

Answers.com?s goal is to reduce the time needed to find useful information. We want to be the place where people go for answers. We don?t use a search metaphor. Search engines are excellent at finding links to other sites that have the information you may find useful, but we try to cut out one step in that loop by giving you a ?best guess? on the topic. So, we have integrated over 100 different data sources, dictionaries, encyclopedias and almanacs in one easy-to-use interface. We have over 3 million topics under management and we bring you information about these topics in a very simple-to-use format. So, it?s not really a search engine, it?s more of a dictionary/encyclopedia/almanac/reference/answers site.
I would assume that based upon your kind of definition of ?best guess? you have some algorithms that can take a search query and determine the most likely response or answer.

Absolutely. In fact, we have two versions of our system really: the website that most people know; and a one-click technology, which, once you download it for Windows or Mac, you can click on any word on the screen and quickly look it up. And when I say any word I mean any word, any document, any application, any windows. So it could be an e-mail, Microsoft Excel or, of course, Word. Click on the word while pressing the Alt key, and it looks it up real quickly. And that actually also uses our sophisticated, what we call disambiguation technology. So ,if you click on the word ?Ford?, and it?s followed by the words ?motor company? you will get a very different answer than if it?s proceeded by the word ?Harrison?, or ?Henry? or ?Francis Ford Coppola.?
So, it?s able to take that term within the overall context of the sentence?
Exactly. It is called a contextual search, and we are very proud of it. We also do other kinds of disambiguation, so sometimes if something is impossible to know, you know that if you click or type in the word ?apple? and capitalize it, it will give a little bit of preference to the company, but it in fact could have been a Ford or something else. Many words have multiple meanings, and we try to come up with a ?best case? of the topic and question. If we didn?t get the right response, we would show you the other choices, so it?s a ?did you mean? approach, but we try to take you to the most useful information on any of our 3 million topics. So, of course, we have all the words in the English language. For Encyclopedia, we have the Columbia University Press Encyclopedia. We have American Heritage Dictionary. We have the Roget?s Thesaurus, of course. We have Wikipedia, but then we also have more sophisticated references like Thomson Gale Cancer Dictionary, and West?s Encyclopedia of American Law. We have everything from basically astronomy to zoology. It?s a one-stop shop for everything you possibly want to look up in any of our 100 encyclopedias or dictionaries.
And are you currently licensing that content from your partners, or are you redirecting users to that content once they find it on their search engine or within your site?

That’s a great question. In fact, we license it typically. Some of it is free. The majority of it is purchased, and we will reformat it and put it in one place. So, let me give you a simple example. Look up a famous personality, an actor, actress or company. What we do is bring the information from many different places. So, I will look up ?Seattle.? The first thing our site provides is that Seattle has a population of 571,000. Now we press Encyclopedia, then it continues with Friday?s weather forecast for Seattle. The local time in Seattle is 10:15 am. The geography, dictionary and Wikipedia for what we received is integrated. It?s a one page look. In this case, it?s five or six different reference sources and one easy-to-use page. So, our goal is to quickly give you an ?everything-you-wanted-to-know-about-Seattle? page, so you can search and blog all kinds of stuff and really make it easy to do. But the idea is to give you a super reference page, or reference page on steroids as some of our users call it. Just to help you get smarter when you are subject to one. So if you are looking up a person, it actually gets a little bit more sophisticated. If you look up ?Bill Gates? in one source, he may be known as Bill Gates, and in another source he might be known as Gates, William Henry the III. At a third place, he will be called Gates, Bill. Lexically, those are all different. Our users don’t even notice it but it?s very, very pretty. However, they do benefit from it, but they don’t think about the fact that this person has different names at different places. Sometimes you will get surprises. In the middle of a demo I looked up ?Jennifer Lopez? and found that there were different meanings for the word Jennifer Lopez. We all think of the famous actress and singer, but it?s also an investment term.

Well, you have not mentioned that you founded answers.com. What was the origin behind the idea?
There is a friend of mine named Yossi Vardi, the grandfather of Israeli hi-tech. He is, by the way, the gentleman behind the instant messaging revolution. Eight years ago he sold ICQ, the first instant messenger, to AOL. And Yossi is just a brilliant idea guy. If you look in one of the new books, by David Vise, on Google?s History, you will discover there is a story about how he was one of the people who suggested the idea to begin AdWords, which is multiple billion dollar business now. Yossi is just a very smart guy and he had seen the technology that we developed where you can click on a word and look it up, but in those days it was CD ROM-based and it was a word translation. So, if you click on the word friend, and you?re set to ?Spanish?, it would show ?amigo? in a little tooltip. Yossi called me up one day and said, ?Bob, this is much more useful than just looking at word translations. What you need to do is basically make the client server and information about anything. So, if you get people, places, things, news, sports, weather, companies, stock prices and the word definition all at one place without leaving the page, that’s very useful.? I said, ?Yossi, well, that?s a great idea.? He said, ?Bob, that?s my gift to you, go run with it.? And we founded a company and we went through a variety of different ? what’s the word?
Incarnations?
Incarnations. We went to an enterprise base and we changed and we went to subscription model and we finally got it right at the beginning of 2005. We came up with a model that?s really been working for us well. It?s so obvious now, a Free Ad-Supported Model much like the Search Engines and many content properties. So, we license content for more than a hundred different places. It is a very wide variety of searches, and we show ads. The company was formerly known as GuruNet, and we changed the name. We actually took five gambles, I would have to call them, at the beginning of 2005. We were very lucky. The first gamble was that we changed the name of the company from GuruNet to answers.com, and I personally loved the name GuruNet. Guru is like a wise teacher, but we tested answers.com and it just worked. The second change we made was the business model, going from a subscription to a Free Ad-Supported Model. It also worked. The third was we emphasized the web version over the 1-Click. We still are providing and love the 1-Click, it?s very useful to download for Windows and click anywhere on your screen and press the Alt key. We found that most of our traffic is still from the web, because people have to visit extra sites to download something. The fourth change we made in the beginning of 2005 is that we put all of our content on one page instead of using a panes approach. And then in the fifth one, we put in Wikipedia, which is such a rich and dynamic in-front site..
So when you were taking a look at making the dramatic changes to your business model and, most importantly I would say from a brand perspective, grooming thatchanging the name to answers.com, what was the key decision factor that drove you to make you switch?
When you talk about branding and building a brand, it takes a lot of money to build a brand. Buying the answers.com domain helped us grow our traffic. Frankly the decision had to do with either a ?Specialized Name? or a ?More Generic Name.? So, that was my question about answers. First and foremost answers.com spoke to our key value proposition, which was that we answers people?s questions. We ended up paying $80,000 for it, and it has turned out to be a great investment. Answers.com has become a very natural place for people to visit. And that is to be and even is in a place to answer all their questions.

What are some of the key issues you face as a source of information for your users?

A lot of people type their questions as real sentences. If you ask ?Who was Abraham Lincoln?s Secretary of State?, we couldn’t answer that question directly at this time. So last December we bought a company called brainboost.com which is a natural language addition to everything we have done before.
Transitioning from a Subscription Model to an Ad-Based Model which is a major change. What was the tipping point that allowed you to make that change?

The issue with a subscription model is not the price differential between $29 and $39. The key issue was getting people to purchase in the first place. With a subscription model, you are fighting against the general assumption on the web that information is supposed to be free. We were successful selling subscriptions and prior to opening up the service we were hosting 100,000 queries a day. We thought it was a pretty good number, but it wasn?t growing fast enough. When we started to give it away we started to grow immediately via to word of mouth and now we are doing between two and a half to three million queries a day. That is a 2500% increase in last 17 months. Google has also been sending us a lot of traffic with their definition link on the upper right hand corner of each page. And it certainly helps that www.google.com, on many words that you would look up, right there on the result page in the upper right hand corner is a definition link.
How did you set up that partnership with them?
It?s not a signed contract but it?s an arrangement where they point to us because they like our site. It?s an informal partnership. They liked our site and decided to point to it. It?s as simple as that. They can stop doing it at any time, which would be a large hit to our traffic. About 15% of our traffic is currently being driven by the definition link. It?s not a small share of our business.
Has the increase in traffic compensated for the lost subscription revenue?

Absolutely. It was a a gamble at that time but it did work out.

What is the future for the encyclopedia, and specifically how does Wikipedia fit into this market?
We are big fans of Wikipedia and have a tremendous respect for the sheer dynamic value that they have brought to their millions of users. No other encyclopedia has the breadth of their offerings, and they can update instantly, which the others cannot say. I think the industry has room for multiple players. As radio didn?t put newspapers out of business and television didn?t put radio out of business and video recorder didn?t put television out of business. Similarly all these different technologies live in a same ecosystem. Sometimes they have to adapt to the new challenges. I think there is certainly a room for professionally edited content and in case of encyclopedias something like Encyclopedia Britannica or Encarta from Microsoft or Columbia University Press Encyclopedia. There is also room for more freewheeling user contributed content such as Wikipedia. Same way as there are professional journalists and there are amateur journalists. We love Wikipedia despite its not being 100% accurate. However I think that over the time the quality of most articles does tend to rise.
In addition to advertising you also license your content to other sites.
Let me correct your point in a subtle but very important way. We don?t actually license the content. We license the service. We don?t give a copy of our content for more than a millisecond to any of our partners. We work with Amazon.com and their search engine A9. They actually point to our service and get the data but they don?t store it themselves. The Internet is filled with information which can be inaccurate, unedited, sometimes inappropriate for children. What we do is we offer parents, teachers, children and other users a way to get relatively safe information when they are surfing. We are trying to give quicker definitions to the explanations of these three million people, places and things. We have that hook up at least for our partners if they want the best of a 100 integrated encyclopedias and dictionaries all in one spot, and answers.com just makes sense. It takes a lot of time and patience, not just to negotiate agreements for all these different data services and content providers but to integrate it, so that you get Bill Clinton on the same page as William Jefferson Clinton. It?s just all there in one easy to use place. So we are existent partners but basically that?s the service we provide as super reference service.
Actuality it sounds like they are almost more of a gateway to your content?
We got much traffic from the search engines themselves, primarily Google. The fact that we all have rich pages, very rich pages. We think the richest page in the world on Brad Pitt or Houston, Texas because it just combines everything you wanted to know. If you are looking a country it will have all population statistics and other kind of statistics, history. It has everything you want to know about the country, about the persons and their biography. Yes, users don?t always notice that on a person you will get these 7 data sources and on a country or place or on a company you will get a whole different set of data sources. In case of company you will get profile, or snapshot, and these are the company?s stock prices, stock chart and just a different look. So basically the fact that we have is really rich page and everything you want to know about the some subject page, I think it helps the search engine to identify the pages as worthy of showing their users. So we are getting some of our traffic from search engines themselves who have decided that we will have a page where it will be in the top 20 or top 30 pages.

But I mean in terms of companies such as A9 and others they are just offering, they are really just a gateway to your content, they are not storing it they are not hosting it, they are just providing access to it from answers.com?

That?s right. A9 is a great example of another approach where they have all these different what they call them panes I think that?s, so they have a search pane, and a lot of books pane, and images pane, and they will have reference pane to build a reference pane.
And then I would also like to get into the multinational facet of answers.com. You have offices in New York City as well as Jerusalem. Where did you first start the company and then how did you expand to the other cities and what were the reasons for it?

That?s a great question. Initially, we started the development in Israel. I should mention that Israel is a powerhouse of technology in general and Internet technologies specifically. If you have ever used an Instant Messenger or a Firewall or Centrino Wireless Chipset, then you are using Israeli technology. There is a very high quality of development. Israeli technology is pretty well thought of because it?s innovative and smart and the cost is actually less to develop technology than in the US. However, it isn?t as inexpensive as China or India, but it?s a very high quality. We started up in Israel and over the course of time we realized that we needed to be closer to the US market for marketing, sales, investor relations and content acquisition. That is what led us to expand to New York City.
How did the cheaper labor costs and access to high end developers help answers.com?
A lot of the talent is driven by necessity. Some of the talents come out of the military, which has an active role in Israeli society, as there are obviously conflicts with its neighbors. It has been forced over the course of time to be somewhat more self reliant and innovative. For instance, I will give you a simple example. The people or fellows who founded CheckPoint, which is a leading firewall company, all came out of the Israeli army. Costs are a little bit lower than in the US, probably two thirds or 80% cost per engineer.
What are the key characteristics that you look for in bringing on people to your team?

It?s kind of corny, but first and foremost I look for integrity, teamwork, talent, and technical competence. Creative thinking. I like people who think out of the box to resolve situations. I look for people who are good communicators, that get along with their teammates. I treat every individual with dignity and respect. My philosophy about employees is that there are three things that really keep an employee on the team. The first is reasonable pay. Second is a good atmosphere and, importantly, an atmosphere they can grow in. The third thing is fun. I can probably count the individuals one hand that have resigned from the company, though sometimes turnover is not a bad thing. You can also bring in new blood, which is good. So as we have grown, we are trying to mix it up but in general very few people have left the company and it?s because we have high level of dedication.

What are the key things that you do as a CEO to drive your small business forward?
I go to sleep every night assuming that we are going to be under significant competitive challenge. If we don?t make our product much better in next 6 to 12 months it will be irrelevant and I really believe that we have always got to improve it. You have to have a strong product that makes peoples lives easier. Sam Walton once said that there is one person who can fire everybody in the company from a chairman on down that?s the customer, in our case the end user. It?s so critical to just keep improving and make it simpler, easier, faster, smarter, more enjoyable. Entrepreneurship is not just how do we promote or advertise it more effectively. From an entrepreneurial point of view I really think that we need to constantly improve the product and never assume that it?s good enough. That?s my primary challenge. The users don?t even care about the word innovation. Nobody looks up for disruptive technologies and nobody looks for innovation. All they want is something that can make their job easier.
What are you doing to keep answers.com from becoming obsolete or irrelevant in the next 6 to 12 months and even longer in the 5 to 10 year range?
Statistically Apple has a much smaller R&D percentage budget than say IBM or Microsoft. Sometimes small can innovate with less money. It isn?t because small firms are smarter, I think it comes down to the simple fact that they can move quicker. Small companies have an advantage sometimes in that they can address niches that the big companies don?t see and then they can quickly move into other niches, constantly growing their products. Microsoft has a bigger R&D budget than Google, but Google has made some very critical headway and not just market share but the innovation in the search field, and Microsoft will be the first to admit it. So Google just built a better search engine than they did. I believe that we have to find new ways of doing our job better, of fulfilling our service. But we need to continue to find new ways to deliver information to the people who need it, innovative ways different than search engines. Users don?t want hunt for information. The traditional search metaphor makes me hunt for it somewhat and that I have to go to a link and then go to another link and go to another link and I look for pages because they are finding me web pages. So I want to provide that information to you in a much more convenient and simple fashion and that?s what?s driving us. Our mission is really to be the best place to look up quick answers about anything. Now obviously we are not going to cover all the angles the other giants do nor should we. We think we are natural complement to search engines and we will continue to improve user functionality and simplicity, very simple general words but there is a lot of hard work before it.
How does necessity drive entrepreneurship?
It?s a very good question. There is a famous quote by Isaac Newton who said if I have seen farther than the current it?s because I have stood on the shoulders of giant, famous quote. And so this Israeli once paraphrased. He said our job as small businesses is to run between legs of the giants. I think that you should wake up in the morning and be very afraid, always asking how you can improve your business. Business is a balance between opportunism and focus. It?s a balance between being overconfident and being panicky, you have to find the right balance. It?s not for those with thin skins or frail nerves. We have to constantly be afraid how we move this thing forward, but that?s a healthy fear. In the case of Israel there are some parallels. In Israel we hope someday we will be at peace with our neighbors. It does teach you to think on your feet, and I would say that?s a good thing. You want to learn from your assumptions and experiences and yet throw them out at the same time. Experience means balancing the way you deal any contradiction or dilemma and means learning from things that have passed. America has a very pragmatic can do attitude towards technology and towards business service, social justice and many other things. I think Margaret Thatcher was the one who said Europe is based on history. America is based on an idea. It?s very empowering, the idea of taking risk, the idea of making something of oneself, the idea of solving problems.

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