Interview with Alex Algard, CEO of WhitePages

We launched the website in 1997 and the company was founded in 2000. Whitepages.com provides people search services to connect people with each other. We do so on our flagship properties; whitepages.com and 411.com and also on partner sites including most of the major telco online directory assistance websites as well as a network of over 1,000 other websites we power with our people search services. We have an entirely ad supported model and all our services are free to use.

Well I was doing a summer internship on Sand Hill Road in Silicon Valley as a college student and got exposed to the thick of things as far as the whole dot com start up movement in ’96. While brainstorming with a friend of mine we felt that there would be a great opportunity to provide an online email directory. So the next day I went back to work and looked up whitepages.com and managed to convince the owner of that website to sell it to me. Then it turned out it was difficult to source email data so consequently decided to turn the whitepages.com site onto more of an online version of directory assistance.

Maybe we’re a little bit ahead of our time because we grew the company from inception in a very lean, efficient manner because we wanted to stretch our dollars as far as we could without having to take on VC funding. I figured if I could reach a few critical product development milestones the company would be worth more and it just turned out that we were cash flow positive from the beginning and we never had to take on any VC funding in the traditional sense.

I was very scrappy, because it was really a one person business up until 2000 as far as using free software so as far Linux and a precursor to the MySQL database. I suppose it would have been nice to have some extra money in the bank as a safety cushion around the 2000 time frame.

It was mainly just a matter of minimizing dilution and trying to grow the business as fast as we could without taking on VC funding. It just turned out that we never got to the point where we ran out of money, so we never had to take on any funding. I should add that we did do, around in 2005, but that was less of a traditional VC funding and I would say more of a partial liquidity event for shareholders and option holders.

I’ll certainly admit that there were times when I was thinking that it would be nice to take on some funding but I was very confident that I had a good business model with strong prospects and I’d say I was fairly determined to minimize dilutions at that early stage. I certainly joked with my friends about how twisted evaluation process was at that time. I recall that companies were valued not just off of revenue multiples without regard to profitability, but in some cases companies were valued on the head count multiples. I recall joking with a friend of mine that maybe if we recruited in a whole bunch of temp staff, we’d be worth that much more.

So the majority of our overall network traffic goes through our proprietary websites; primarily whitepages.com and 411.com. And our proprietary sites also tend to monetize better, so they’re more important to the company financially. However, from a broader perspective we take a relatively agnostic view to the source of the traffic, and at the end of the day we really care about maximizing distribution to ensure that as many users as possible benefit from our people search services.

I think it’s highly dependent on the core competencies of the business. If a website has a strong core competency in traffic monetization or ad sales it probably makes more sense to drive the site traffic to proprietary or drive the traffic to proprietary websites. If it’s a company with more expertise on the technical side in that case it probably makes more sense to lean toward the distribution network. It just so happens that we’re pretty good at both and that’s why the hybrid model makes sense for us.

So, many years ago I’ll admit that I lost some sleep over the potential Google threat but I don’t lose sleep anymore and the reason is that first of all a lot of our traffic arrives at our destination properties through direct navigation so over time we’ve established strong brands where people have excellent active brand recall of whitepages.com and 411.com and Google never sees that traffic.

Second, in the people data space, in order to build the best possible database, it’s important to invest in paid license data. Google today has steered away from license data; they are willing to do a lot of work to scour the Internet for freely acceptable content. We have invested significantly in page content and we think that will continue to be an important pillar for our company.

And thirdly, believe it or not, for all their success, Google is spread very thin. I think there are numerous examples of verticals where Google has lost, and we think that with our unrelenting focus on people search that we will win against Google as well in the people search category.

Spock has some interesting ideas, but it’s pretty far off from what we are hearing that consumers need. I don’t think that we are going to move into the direction of merely crawling people data online and then aggregating that together.

However, when you combine some of the publicly crawled information, with the data that we already house on our website, namely practical contact information, we think that that represents something much more useful for our users.

I think, at the end of the day, websites that can provide unique people data will win the battle, and one of the issues with some of the people search startups is that they don’t have much as far as unique people data.

I think many of them are marginal improvements over what you would see in Google search results, and it takes a lot more than a marginal improvement over any website in order to win users over.

I think the people search business is all about providing the most complete accurate set of data. There are a lot of data quality issues in web crawled information. We are very excited about our positioning.

I certainly think there’s room for vertical search specialist websites to coexist with Google, but I think there’s a limit to it. I don’t think that we’ll see micro search engine sites, and a big reason for that is…a large part of that is driven by user behavior as far as being able to recall what websites are turned to for various types of searches.

Within the People search category, we are large enough that users easily remember whitepages.com and 411.com and turn to us whenever they think of doing a People Search; however, I think that the smaller level micro sites might have difficulty in staying at the top of minds of the user.

Absolutely. There’s only so much user mind share available.

Well, that’s an excellent point, and that’s staying top in mind of the advertisers. For the micro level sites, it might be difficult to ever get to the point where they are able to build out a real sales force, a real advertising sales force. And they might be potentially relegated to the ad networks, including Google Adwords.

In the people search space, it is very difficult to build a business model on either the ad networks and, specifically on keyword based ad networks, such as Google Adwords. The reason for that is there are not a whole lot of advertisers who will pay for regular proper names. Looking at the long tale of people search, there’s not a whole lot of keyword monetization for that. So that’s a long way of saying that micro level search sites might have a difficult time to monetize the traffic.

I’m fascinated by interesting Internet business models. We’re in the midst right now of the Web 2.0 phenomenon. I think that the Web 2.0 label is going to disappear. But if it didn’t, I wouldn’t be surprised if we’d be looking at Web 10.0 in many years.

I’m really intrigued by building services that provide information online that either just simply wasn’t available at all previously or ways to disseminate information much more efficiently online. I think that’s a cornerstone of both WhitePages.com and CarDomain. For CarDomain specifically, that website is largely built on a common interest in cars and the fact that car enthusiasts love to share ideas and exchange tips about cars. The Web is a great way to share that passion.