Answers Corporation (ANSW-NASDAQ)

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April 3, 2009 Issue

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Answers Corporation, With The Fastest Growing Site In The United States In 2008, Provides A Vast Amount Of Information On The Web, Supported By Performance Ads, And Has Seen Revenues Grow 30%

Company Profile:

As a leading online answer engine, Answers Corp. (NASDAQ:ANSW) owns and operates Web properties known as and, which are dedicated to providing useful answers in thousands of categories. is a community-generated social knowledge Q&A platform, leveraging wiki-based technologies. Through the contributions of WikiAnswers' large and growing community, answers are constantly improved and updated over time. was ranked by comScore, a global Internet information provider, as the fastest growing domain of the top 200 in the U.S. in terms of unique monthly visitors in 2008. The award-winning reference site includes content on millions of topics from over 250 licensed sources created by leading publishers, including Houghton Mifflin Company, Barron's and Encyclopedia Britannica.

Robert S. Rosenschein

President, Chief Executive Officer and Chairman of the Board

Robert S. Rosenschein has been Chairman of our board and President since he founded Answers Corporation (previously GuruNet) in December 1998. From December 1998 to April 2000 and since May 2001, Mr. Rosenschein has served as our Chief Executive Officer. From 1988 to 1997, Mr. Rosenschein was Chief Executive Officer of Accent Software International Ltd. (formerly Kivun), a company that developed multi-lingual software tools, and from 1997 to 1998, Mr. Rosenschein was Chief Technical Officer of Accent Software International Ltd. Previously, he worked for Data General, American Management Systems, and the World Bank. Mr. Rosenschein graduated with a B.Sc. in Computer Science from the Massachusetts Institute of Technology in 1976 and received the Prime Minister of Israel's Award for Software Achievement in 1997.


Information & Delivery Services

Answers Corporation
237 West 35th Street, Suite 1101
New York, NY 10001
Phone: 646-502-4777

Interview conducted by: Lynn Fosse, Senior Editor,, Published – April 3, 2009

Mr. Rosenschein, what was your vision when you founded the company and where are you today?
Mr. Rosenschein: “When we founded Answers Corporation we wanted to provide information on demand. We felt the world had too much information that was too hard to find on the Internet. We wanted make it easier. The company developed and evolved in many ways, but where we are today is focused on giving people answers, where they want them, when they want them, quick, convenient and trusted. We have two web properties today, one is called, and the other is called is an integrated reference solution. We combine 250 dictionaries and encyclopedias. is an online database of questions and answers. lets the people ask whatever they want, and the answers come from the community, people are typing in answers. What makes it unique is that people can edit, and improve the answers over time. Answers is a fast growing property, and our goal is to be the best providers of answers about anything on the Internet.”


CEOCFO: What is your revenue model?

Mr. Rosenschein: “We are ad supported, which means we don’t charge anybody for using our site. We show primarily performance ads from Google Adsense, but others also. We show ads on the page, and some percentage of people click on the ads, and we make money from that. But the entire site is free for usage, with ads on the page.”


CEOCFO: What is the integrity of the information since people are editing it?

Mr. Rosenschein: “At the moment you have the users contributing content, and that is not only the rage on the Internet today; in some ways it is the future of information as information comes from a wider variety of sources. In the old days, only the press could publish information for book publishers and the newspapers. That was so even when they went online were the purveyors of information, and then came citizen journalism, blogs, and social networks like Myspace and Wikipedia. We call this area social knowledge, which means the community is contributing information about areas of interest. Nobody knows about everything, but everybody knows a little bit about something. We count on the community not only to enter the initial information, but to maintain and, over time, improve and edit the information, so that the quality of the information actually rises. At no point in time can we represent that a particular answer is 100% accurate or correct. Mistakes do go in either unintentionally or intentionally, but over time the community helps clear it up. In the same way you saw the trend to online newspapers to blogs, you saw a trend in reference information from published encyclopedias, which we are big fans of, to Wikipedia. The information in our question and answer database actually comes from community. They are responsible to put it in, edit it and improve it over time.”


CEOCFO: How do you get all the information from

Mr. Rosenschein: “One of our goals was to make it easy for you to find relevant information on a subject. There is a slight difference between our two products, and On the side of reference answers, we have purchased and aggregated information from many editorial sources, which we license. We always identify the page with the source, so that if something came from a dental or medical dictionary, real estate dictionary, marketing or accounting dictionary, the reader can see that this is the definition according to that source. We choose it based on areas of interest and based on categories, so we have business, law, entertainment, medicine, health, literature etc, and you can browse our library. We have millions of different topics; we sometimes call it a reference-shelf on steroids. You can find information on nearly anything on our library shelf, on the side. On the side, we have categories where people have a lot of questions. There is plenty of overlap. You can be sure that health and business, science and law have plenty of questions on the user generated database. However, there are also other areas of enormous interest, such as relationships or health questions. Sometimes people ask fairly candid questions, things they don’t know where to ask elsewhere on the web. We of course keep an eye on it for appropriateness. Automobiles are a big area for, questions being asked once every three minutes. There is a virtually unlimited growth potential for the questions put into the system. We see ourselves as very much the collector and organizer of the Q&A database, we want people to find information on demand.”


CEOCFO: What is the demographic?

Mr. Rosenschein: “It is a broad demographic; everybody from teens to elderly. We have a very broad audience, tens of millions a month, who read our answers. They find us from Google typically, or they will go to Google and look something up and Google sees its job, of course, as connecting the question asker with a page that may have the relevant information. Google has said that they want to get you off their page as quickly as possible, but they want you to come to them first. Google has what they call ‘spiders.’ They read our site and identify which pages go with which questions. There are others that will answer questions, and you the reader can enjoy that information. We have another group called ‘volunteer supervisors,’ over 500 people who moderate subcategories for the fun of it, their own personal enjoyment and satisfaction. Some of these people are experts who follow category-specific questions; they moderate and help keep it clean. These volunteers perform an amazing contribution for the greater good and they come from all walks of life. They just want to contribute their knowledge; the benefit is primarily being able to share their passion. Everybody in my opinion is passionate about something and knows a lot about something. If you know a lot about real estate or plants and animals, you may want to contribute information about that and answer questions. There are over 4,500 categories.”


CEOCFO: What is the competitive landscape?

Mr. Rosenschein: “The primary competitor for us is Yahoo!Answers; they have a good product. However, we work a little bit differently than them and they drive a lot of traffic to the site. In the last two years we have gone from 6% to 35% market share when compared to Yahoo!Answers, according to comScore, based on the unique number of visitors in the US. So we have been gaining market share on Yahoo!Answers. The other players are much smaller. But Yahoo!Answers is the major one. I would contrast to Yahoo!Answers very simply: Yahoo!Answers is more of the bulletin board approach where people ask the questions and other people answer it, but you cannot go back and change it. Even if you asked the question, you cannot alter anything. is collaborative, so every question and answer is a page, and anybody can change it-- hopefully for the better. Over time it gets better, and the better it gets, the more people come to it. We feel every page is a unit, using the wiki approach, which Wikipedia made so popular. We try to make the content better and better.”


CEOCFO: You have had a milestone quarter and great fiscal year; what is happening?

Mr. Rosenschein: “To understand our recent growth and success pattern, you really need to understand The reason it is so exciting from a company product business prospective is that it builds on itself. It is a very simple model. I have already described what the product does, but basically, the more people ask questions, the more other people answer the questions. The more others answer the questions, the more Google and other search engines notice the answered questions, the more people come to the site, enjoy the questions and ask more questions. It is a virtuous cycle, getting better and better. We call it a network effect, where it becomes more valuable the bigger it gets. Success breeds more success. Something about the way we built the site has just been growing dramatically. I won’t use overly strong language, but we have seen a dramatic increase. In 2007, was the fastest growing domain by percentage of unique visitors among the top 1,500 U.S. sites. In 2008, again the fastest growing, according to unique usage percentage in the US among the top 200 sites. That is a sign of the sheer growth of content and the usefulness of the site. The traffic has been taking off and growing dramatically. What that means in terms of business is that in Q-4 we announced $4.6 million in revenue, which was a 30% sequential growth for the quarter, mostly driven by We hope to see dramatic growth this year also of course. On the adjusted EBITDA side we also have a very good successful Q-4, going from a half million dollars in adjusted EBITDA in Q-3 to nearly two million dollars of adjusted EBITDA That is a little bit of a hard act to follow, because it was a very successful Q-4.”


CEOCFO: What effect, if any, do you see with the current economic scene?

Mr. Rosenschein: “We believe there will naturally be some downward pressures on monetization rates, I would say small to moderate, but we plan on it, we budgeted it in, and we expect it. We have not yet seen dramatic drops in our monetization or traffic, so for now things are going well, but let’s be cautious enough to continue to work at it, grow our traffic, and our business, for a more successful 2009. I don’t want to get ahead of ourselves or make any forward-looking claims. I would just say that things are going well and we hope to continue cultivating it.”


CEOCFO: Is the investment community paying attention?

Mr. Rosenschein: “I think it is a hard time for investors on microcaps. Obviously, we are going to have to continue to deliver on our business promise, and we have every confidence over time. I don’t comment on the stock price in that manner. We want to build a successful business and believe that, over time, the investment community will value that as a function of our top-line growth and profitability growth.”


CEOCFO: What might people not realize about that they should realize?

Mr. Rosenschein: “One thing that we have explained, but I always feel that we need to explain it better is the two components of our business are different. There is the reference business and the user-generated property called They have different metrics and financial measurements. has been flat to moderately decreasing. has been growing dramatically and nicely. In a sense, even though is contributing to the business, because it has dropped, it has somewhat masked some of the more dramatic growth on the side. Therefore not all of our investors realize that continues to grow quickly.”


CEOCFO: In closing, what should readers remember most about Answers Corporation?

Mr. Rosenschein: “We are building a business based on a solid model of building the world’s largest and best Q&A database that is a business model with very material upside and room for growth. It is actually encouraged by the way the Internet grows and the way the search engines grow. We believe it has tremendous value to users looking for information and therefore has it has significant upside in its growth model for investors who are interested in a property which could grow large. As a microcap we expect the numbers over the coming years to show more and more promise.”


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“In 2007, was the fastest growing domain by percentage of unique visitors among the top 1,500 U.S. sites. In 2008, again the fastest growing, according to unique usage percentage in the US among the top 200 sites. That is a sign of the sheer growth of content and the usefulness of the site. The traffic has been taking off and growing dramatically. What that means in terms of business is that in Q-4 we announced $4.6 million in revenue, which was a 30% sequential growth for the quarter, mostly driven by” - Robert S. Rosenschein does not purchase or make
recommendation on stocks based on the interviews published.