Home > Notes > Sanjay Sabnani – CrowdGather

Sanjay Sabnani – CrowdGather

Sanjay Sabnani is the founder and CEO of CrowdGather, which is bringing together and improving the world of online communities for end-users, forum owners, and marketers.

Here’s the story.


Background

  • BA in English Literature
  • has been a Senior Executive at numerous small companies
  • was working for a public health care company, while moonlighting CrowdGather

CrowdGather

  • primary mission is to gather the largest crowds on the internet by acquiring forums and message boards

Rocky Start

  • based upon the success of his original forum, www.genmay.com, Sanjay started searching different forums trying to find one for sale
  • he found a site for sale called forumjunkies.net, and bought it with his own money
  • very soon after purchasing the site, content started getting deleted right before his eyes, because the site’s admin felt the previous owner shortchanged him on the profit from the sale
  • next all the members left the site and started a new forum called Forum Defectors, needless to say neither site is around any more

Lessons Learned

  • Sanjay learned how to document his purchases
  • he made sure that the administration is fully aware of the sell and are fine with it

CrowdGather’s Growth

  • Sanjay acquired his first forum in 2002 as just a hobby, and by 2003 he had to put it in a LLC, due to growth, complaints, take down notices, credit card processing, etc
  • the forum grew to top 10 in forums in the US, and still top 30 today
  • Sanjay got aggravated at how little recognition his forum got from ad companies and realized the solution was to gather the crowd, collective bargaining
  • he decided the easiest way to do this was to build critical mass on their own, which meant acquiring more forums
  • In 2006, they started acquiring more forums, and
  • In 2007, CrowdGather, his moonlighting business was consuming most of his time, and
  • In 2008, he took a leave of absence from his day job to focus on CrowdGather

Forums & Ad Networks

  • forums do better than gambling and adult sites, but still treated at the bottom in display advertising
  • a forum can make 20¢-50¢ CPM’s, while a cooler perceived site with the same traffic can make $20-$50 CPM’s
  • forum’s CPM’s are low based on ignorance and fear
  • corporate advertisers are concerned about forums being uncensored or having illegal activity
  • some ad networks purely reject you if you go in and say “I own a forum,” but welcome you if you go in and say “I own a major site,” even though 85% if your traffic is still on the forum
  • CrowdGather serves as a shield for advertisers to trust they are on good, censored sites

Why Forums?

  • the primary motivation was a financial opportunity in doing better than 50¢ CPM
  • Sanjay had a vision of building an online country
  • he knew there were decent forums out there being overlooked
  • he realized the larger the advertiser, the more the money
  • corporate advertisers don’t care if you have 10,000 pave views on 1 site or spread over 20

Forum Culture

  • forums are owned by a wide variety of people
  • people migrate to forums to either find an answer to a problem or to communicate with like minded people; and because they’re stuck at home (for whatever reason) and need something to do
  • people stay at forums because they have created bonds and friendships with one another
  • people leave forums because they either no longer have a reason to be at home, or they graduated to the new social networking sites
  • people will also rebel against forums if you come and change one small thing; a administrator resigned because he changed a logo she designed

Forums: Past, Present & Future

  • forums are outdated; they existed before the internet
  • forums have come a long way but they’re still old and need rebuilding
  • Sanjay is working on rebuilding forum software from the ground up, for “today’s internet”
  • a software: that enables owners to populate a new domain and new forum with users who are interested in another topic, with a thread reader aggregator, that has admin efficiencies, with 1-click acception for users to many forums

Getting Funding

  • Sanjay realized he needed funding because it would be difficult to attract larger networks on retained earnings; any capital/asset intensive business requires outside financing
  • he spent his whole life savings and took loans from relatives, but was still secure with a well compensating job and a good economy
  • he realized he need equity financing when that money dried up; he needed top “Go Public”
  • an IPO is the traditional way to take a company public, where the company is listed on a public exchange where shareholders can buy/sell/trade shares; liquidity of shares
  • Reverse Merger: achieves the same goals of getting shares traded in the market place, only you go through the back door. This is for when private companies need to go public but an IPO doesn’t seem beneficial, they use a shell company (shell companies are already public), then take over the shell company as a public entity

CrowdGather Used A Reverse Merger

  • they acquired the shell company in exchange for letting them keep a percentage of the company, then went and secured other investors
  • the reverse merger wasn’t that difficult to him because of his prior experience in that field
  • most investors were people he had previous relationships with; they didn’t invest in the business, they invested in his abilities and reputation
  • the reverse merger is the only option he felt he had on raising money
  • venture capital and angel funding wasn’t his expertise and would have been more difficult

Doing Reverse Merger/Finding Shell Company

  • some companies have done reverse merger and raised money from their companies
  • securities attorneys can help you find shell companies; they deal with all things for public companies
  • public company auditors can as well
  • conferences like LAVA holds seminars on reverse mergers

CrowdGather Today/Future

  • today it’s an 8 people company with 80 forums to manage
  • they’re going to continue keeping the forums good and keep acquiring more forums
  • they’re getting more attention now, so it should be easier to raise more capital
  • more capital would give them the right mix in talent to achieve their company goals
  • in 2010: they’re looking to raise page views from 10-12 million to 60-70 million, and raise unique’s from 2 million to 7 million

Business Advice

  • “Start forums tight, with only a couple of rooms and then expand.”
  • “You don’t make money by just doing a reverse merger. Chances are you may not get noticed, so do research and know what you’re doing.”
  • “You have to pay for the shell company, with either equity or cash.”
  • “As an entrepreneur, you’re pregnant with the idea. You have to go and have the baby.”

Personal Points

  • Sanjay promotes the “F” word: Forums
  • he had many people from his forums over at his house
  • he has many sleepless nights over his company
  • he almost bought the site Zune Boards until he realized the site’s owner was underage; then he had his parents sign the paperwork and purchased it for $62,000
  • he wants to ask more before he makes decisions, but if middle ground can’t be reached, he’ll make the decision and take abuse
  • he doesn’t try to accommodate everybody anymore; he realizes there’s no way around him being the bad guy
  • claims to be “to forums what Vince McMahon is to wrestling,” the arch-villain
  • he’s willing to give business advice on reverse mergers: sanjay-at-crowdgather.com

Connect With Sanjay

CrowdGather

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  1. February 17, 2010 at 12:07 pm

    Very insightful! Thanks!

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