What’s It All About?

Investors looking for a company that combines the best of critical mass
and vertical communities might want to think about About.com (BOUT).
Its site now ranks #10 on Media Metrix’s top 50, with 13 million unique
visitors per month.

The company offers a portal-like interface with 28 main channels of
content that are divided into 700 niche environments (sites). In
addition, an expert guide oversees every site. By breaking the site
into niche verticals, users stop by, stay, and come back often because
their specific needs are being addressed. Of course, advertisers enjoy
the large base of users. The real value, though, is About’s ability to
target users in any of its 700 vertical sites with advertising and
commerce offerings. Four hundred six companies advertised on the About
network during Q4:99, up from 167 during Q1:99.

We recently sat down with About.com’s founder and CEO, Scott Kurnit to discuss the company’s competition
(Yahoo!, Lycos, AltaVista), market valuation, business-to-business (B2B)
e-commerce initiative and its recent acquisition of ExpertCentral.com.

[email protected]: From a user stand point Scott, what really
separates About from the likes of a Yahoo, Lycos, or AltaVista?

Kurnit: We really view ourselves as a content network and we’re
commonly confused with your average portal because we cover everything.
About has 50,000 topics, covered by 700 guides, one million links in our
directory, along with 250,000 articles. But what separates us is that
we’re not only a broad play, but we’re very deep in each of our
verticals. We are actually this elegant place sitting between the broad
horizontal portals and the singular verticals.

[email protected]: So you’re really building About as a network of
destinations that compliment both spaces (portals and verticals).

Kurnit: Exactly. We’re in the business of bringing people into
an environment that is rich with content, directory, and commerce
offerings. So our view is use Yahoo! and About.com, use Women.com and
About.com.

[email protected]: Are advertisers joining your network for these
same reasons?

Kurnit: What we can deliver for an advertiser is complete
contextual messaging. You can buy a search term somewhere, which
catches a customer on his way some place, sort of like an advertisement
on a bus breezing by. In our case, we’re capturing our customers within
a destination, so they’re “inclined.” You get better click and
ultimately transaction results from inclined customers.

[email protected]: Are we seeing this vision and execution in your
top line?

Kurnit: Definitely. We had a blowout fourth quarter with $13
million in revenue compared with $2.4 million in the first quarter.
Advertisers will pay premiums when they can get a contextual environment
of high quality. The beauty of About, if you’re an advertising agency,
no matter what client you have, we have at least one vertical (out of
700) that fits your needs. Thus, we become a must buy in almost any
campaign. That’s true for e-commerce partners as well.

[email protected]: The difference in market capitalization between
About.com and Yahoo! is often in the range of $90 billion. Are there
any trends, developments, or investor recognition of the respective
business models that you could see closing this enormous gap?

Kurnit: Yeah, investors will start to see over the next couple of
quarters that we have indeed built a platform. While we have garnered
positive market value for being an efficient content network, we are not
getting credit for having built what is really a business accelerator.
The platform can now spawn businesses that are doing well as independent
entities with a lot of value, and they’re buried under o

ur platform and
valuation. We’ve seen some very large institutions take significant
holdings in our stock over the last few quarters (Putnam TCW, Mackenzie
etc).

[email protected]: What is the story or pitch to institutional
investors right now?

Kurnit: We have a differentiated customer experience and we have
some of the best barriers-to-entry in the business because of what we’ve
built in the last four years. It’s not like building a simple new robot
that spiders the Web. We’re just now reaching platform status where we
can spawn new businesses easily and inexpensively. A great example is
our new “How To?” offering which we’re just putting up now (the guide
for personal finance/stocks would have information on HOW TO short a
stock). We looked at eHow, a Hummer Winblad company, and figured
this was something we could literally recreate in a month. For roughly
$100,000, we enter a whole new category, where eHow is a full-scale
venture backed business that requires a staff and marketing. We’re able
to instantly enter a space, where they probably took over a year or
more.

[email protected]: You purchased ExpertCentral.com in January…

Kurnit: Yeah, probably the biggest misconception about us is that
the guide model approach can’t scale (because guides will spend enormous
amounts of time answering email, 1-to-1 interaction). Our guides spend
most of their time doing what Tom Brokaw does. Brokaw can reach 1
viewer or 100 million viewers with absolute scalability. Now, he
doesn’t deal with them on a 1-to-1 basis. Our guides are writing
articles, creating Net links, and running forums/chats, can also deal
with an unlimited number of customers. So we’re a fully scalable and
human system.

The one place where the system wouldn’t scale is on the 1-to1 question
exchange, which is why we bought ExpertCentral.com, which is designed as
a scalable 1-to-1-question exchange system. ExpertCentral in a nutshell
is the eBay for intellectual property. Its 5,600 experts who have filed
with the system, registered their bios, and have stated where their
expertise resides. You as a user ask a question. Experts can either
answer it for free or they’ll come back and tell you what it’s going to
cost to answer it.

[email protected]: How about your cut?

Kurnit: On all paid transactions we take a 15 percent cut. To
date, the most expensive answer is $1,000, of which we took $150.

[email protected]: A lot of talk about your new B2B initiative. Why
does About.com belong in this space?

Kurnit: Well, we’ve had B2B all along and we currently have 19
verticals within our About Industry section. That number will grow to
60 verticals when we launch our new B2B initiative in the third
quarter. We have a couple key advantages that we don’t think anyone
else has. First, we have a lot of traffic on the B2C side as well as on
our existing B2B sites and second, we have the most efficient production
system in the industry for creating targeted, comprehensive vertical
sites. We’ve already launched 700 verticals so an additional 41 by the
third quarter is a relatively easy thing to do.

[email protected]: We’ve all heard it Scott–domain expertise matters
most in B2B. Can buyers and sellers be assured that they have the best
quality guides within each vertical?

Kurnit: You know, best is a funny thing. We will eventually run
over 100 verticals in the B2B space. We’re competing against
VerticalNet on the one side which also runs a multitude of verticals and
the e-Steels etc. on the other side who are running singular verticals.
The average person reads more than one magazine and watches more than
one television channel. Our view is that the differentiation of our
content and the consistency of it, both from our consumer side and
business side, and the fact that the average person will

use more than
one of our verticals, means an aggregator has to step in. The prominent
aggregator in B2B will most likely be someone you’ve grown comfortable
with somewhere, at some point in the past. So one of our advantages is
the fact that our core business is about helping all people, some of the
time.

Our About Me personalization allows users to add About.com sites,
features, and services to a page that helps people with their all around
lives. This is where we have a real advantage over other B2B sites.
VerticalNet can’t tell me what’s going on in New York City or provide
news on a hobby of mine. They’ll never be able to do an About Me
because they’re in the business of serving your needs in solid waste. I
can’t believe there is anyone interested in only solid waste. If there
is, I don’t want to know them (laughs). We’ve found that people do not
live by bread alone.

[email protected]: Do you feel that your stock has yet reflected
this new B2B push?

Kurnit: No, definitely not. I mean, About.com has more revenue
than VerticalNet and we’re non-existent in market cap on a relative
basis.

[email protected]: A matter of time and execution?

Kurnit: Yeah and I’m content to have shareholders wait and see.
Again, major institutions are taking positions because they’ve heard the
story and they’ve seen us deliver on everything we’ve promised in the
last three years. It would be great to have the market cap now to make
acquisitions more efficient, but we’re in this for the long haul, and
we’re confident that we’ll get our due recognition.

[email protected]: Sounds good Scott. We’ll be watching closely.
Thanks for your time.

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Will About.com’s B2B initiative create Internet market value for shareholders? Discuss it here

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