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Ehow.com Fields Questions in Growing Information Market: Q&A
New York, Feb. 26 (Bloomberg) -- Courtney Rosen used to have a ping-pong table in her office. Now it's been pressed into service as a desk for new employees. The former Andersen Consulting analyst founded eHow.com, a year-old company that provides step-by-step answers to questions like ``how to ask someone on a date'' or ``how to avoid bears.'' Rosen visited Bloomberg News in New York to talk about eHow.com, which is based in San Francisco.
Q: What is eHow.com?
CR: People use eHow to find out how to do things and buy everything they need to get it done. Consumers are whole people. They go some place and not just get information but also get commerce; they want to amass the two and get a real solution.
The morning after I struggled to find out how to fix inline skates, I woke up and thought, wouldn't it be great if there was a site that you could go to find step-by-step instructions, a shopping list and all the links to buy? And that was the inception of eHow.
Q: Who answers how-to questions for eHow.com?
CR: People who've done it before, and that tends to be different than someone who calls himself an expert. Very often experts are almost too knowledgeable; they can't boil it down to the level a novice wants and write in the tone of being friendly rather than top down. We have about 15 or 18 in-house full salaried writers and about 200 freelancers.
Q: How is eHow.com different from other sites with similar services?
CR: Well, our biggest competitor is actually friends and family. We answer 98 percent of all how to questions. We do have a resource named Bill McClain who is an author and the Webmaster at Xerox Corp. Bill is a great help to us. Ask Jeeves Inc. is very different because they are a search technology. They direct people to the content where they can find the answer to their question; they do not create their own content. Ask Jeeves gives the consumer the understanding they can answer anything but if you look at their prospectus or one of their reports since filing, they answer under 50 percent of questions.
Q: Are there any questions you will not answer?
CR: The best way to think about it is would your mom sell it? And in the Bay area we have some pretty liberal moms, but, really, it's ``Could you tell your parents?'' We just had a debate about hunting. So, do we sell hunting knives? Then it went to, do we sell fishing poles? Then we went into a philosophical debate that fishing is killing, too. You know there is talk that Ask Jeeves is doing an adult site. Very early on there was some excitement about eHow-after-dark. But we have enough to keep ourselves busy in eHow in the light.
Q: What are the most frequently asked questions?
CR: In the top 10 always are: ``how to lose weight,'' ``how to ask someone on a date,'' ``how to improve my abs,'' ``how to burp a baby,'' ``how to choose baby names.'' ``How to put on a condom'' is generally in the top 15, and the federal government does embrace that from a safe-sex perspective, so we do answer.
Q: How do you protect yourself from potential lawsuits?
CR: Our liability is equal to the Better Homes and Gardens and Men's Healths of the world. We approach it with smart business practices: provide great information, have appropriate legal disclaimers, have insurance. There is very little information out there; very few insurance companies know how to handle this right now. The most powerful person in the company is not me, actually; it's our editor in chief. If Bill (Marken) sees something he does not like, he can kill it.
Q: How does eHow.com make money?
CR: What makes this particularly attractive from a business standpoint is it has multiple revenue streams. It has not only an advertising revenue stream but also has the commerce revenue stream. Very shortly we will be able to syndicate not only content but commerce. We can take how to wax a car with the step-by-step instructions, the shopping list and all the purchasing and syndicate it out to any site that wants it so we can carry the transaction anywhere we go, for instance, to the Turtle Wax Inc. site or the college sites.
Depending on the retailer, we make 5 to 15 percent commission with the true average being about 8 percent. Revenue breakdown last year was 95 percent from advertising and the remainder commerce. This year it will look much more balanced. What we're finding, however, is that we're a great advertising venue and we're able to command relatively high rates so it may not be as balanced as we hoped, but that will only be because revenues will be higher than we expected on the advertising side. The reason is we are one of the few sites anywhere in the world where the manufacturer can brand, inform and sell all in the same exact moment.
We have not made sales figures public, but it's good; I am very pleased.
Q: How is eHow.com funded?
CR: Hummer Winblad Venture Partners, Media Technology Ventures and a few smaller players were our first-round investors in which we got $3.5 million. Then we did a $20 million second round which included our first-round investors as well as General Electric Co. through its GE Financial Assurance side; Federated Department Stores Inc. through Fingerhut Cos., E.W. Scripps Co.'s Scripps Ventures, Sumitomo Corp. and Freedom Communications Inc..
Q: Do you plan to go public?
CR: We have a lot of money right now. Going public is a great third round; it's a great funding event. We can probably go any time we wanted to, but it's a question of timing and what's smart for the business.
--Sara Pepitone in New York