Sramana Mitra: I want to know precisely what happened in 2008. What are the significant things that you did in 2008 and how did those play out? This $1.1 million, was there a concentration of colleges you were getting this from?
Blaine Vess: In 2008, we launched in international markets and started the acquisition of our competitors. That year, we ended up doing about $2.8 million in revenue. We get visitors from all over the world so it wasn’t coming from a specific college.
Sramana Mitra: How does a $2.8 million revenue company start acquiring other companies? What are the mechanics of acquiring companies at that point and what is the rationale behind it?
Blaine Vess: There are a number of small sites like ours in the research and course notes space. We were quite familiar with these sites. Most of them were started by fellow college students or young entrepreneurs. We wanted to start growing our traffic. I casually reached out to a couple of our competitors to see if they would sell. The first one was a site called bignerds.com. The same owner actually owned a book notes website called madnotes.com. We were familiar with each other and he was moving on to other things. We ended up buying it for less than $40,000.
Sramana Mitra: Which college was this person out of?
Blaine Vess: I actually don’t know what college he went to.
Sramana Mitra: You knew of this company and you were able to acquire the company for less than $40,000. What did that bring you?
Blaine Vess: The site was probably getting about three or four thousand visitors a day. He was mainly monetizing via advertising but since we had seen success in subscriptions, we were confident that we could take that traffic base and monetize it better through subscription.
Sramana Mitra: Did that play out exactly the way you hypothesized?
Blaine Vess: It did. We revamped the site. The site had pretty old codes and it looked really out of date. We put our processes and the model of asking people to contribute content to the site in exchange for getting access to the rest of the content on the site. We were able to grow the content that way. It played out very well.
Sramana Mitra: Did you maintain his brand also or did you fold that into your brand?
Blaine Vess: We maintained the brand. We wanted to maintain the traffic that he was getting. We actually still own that website and it’s grown significantly since then. At this point, it gets around 20,000 visitors a day. We really wanted to maintain the traffic that he was getting from Google and Yahoo.
Sramana Mitra: The rationale of maintaining multiple brands doing roughly the same thing is because you wanted to capture that additional traffic that Google had already started sending?
Blaine Vess: Yes, exactly.
Sramana Mitra: There was another site that this guy owned that you also acquired. Go ahead and talk about that one.
Blaine Vess: It was called madnotes.com. It was a site focused on book notes for The Great Gatsby and other classics that people read in high school and college. He wanted to move on to other things. It wasn’t the site that we were focused on and that we really wanted in the deal but it made sense for both parties to buy it. We kept that one alive for a while. It got much less traffic than BigNerds. We were fine with buying it and eventually merged it into StudyMode.