Ben Barren - Co Founder of Gnoos

Vishal Wednesday, June 18, 2008 , , , , , , ,

In our ongoing coverage of startups coming out of Australia and interviews with CEO's, Media Personalities, Philanthropists, and VC’s, today we showcase a successful venture and an exciting entrepreneur Ben Barren, co founder of Gnoos - Australia's Largest Blog Search Engine for Consumers and Enterprises.

I recently met Ben through our common friend Duncan Riley. I was highly impressed by his breadth of knowledge and enthusiasm. I followed up with him to do an email based interview with me to explore his thoughts on the progress of his various ventures and new emerging trends. This is what he has to say:

• What is the name of your company, the people involved, and can you provide some background on the venture?
Red Lion Ventures Pty Ltd owns Feedcorp Pty Ltd and Gnoos Pty Ltd. Red Lion Ventures was co-founded by Michael Leone and Ben Barren. The business has doubled revenue in the last 3 quarters so we’re hitting a real growth spurt.

In early 2005 Michael and I believed there was a great opportunity around enterprise RSS; This is when companies such as Feedburner, Newsgator and Technorati were flourishing and sites using RSS like MyYahoo, Flickr, and Delicious started to thrive. We wanted to localise this opportunity.

Feedcorp deals with our enterprise customers in the community arena. Gnoos relates to our Aussie blog search engine in the consumer space, whose business model is a mirrored deployment of the index running intelligence and syndication offerings for our clients who want to track when their brands and topics of interest are mentioned on Aussie blogs and twitter feeds.

In November 2007 the business also brought in Peter Burley as Shareholder + CEO of Feedcorp as an experienced media, online and management professional. Pete has previously worked setting up Fairfax Digital, ninemsn, and Vividas.

Our fulltime headcount has grown from 4 employees to 9 with the majority of those (6 FTE) being in engineering, as well as hiring an experienced CEO Peter Burley.

• Please tell us about your venture/company?
Gnoos has the largest index of Australian blogs and media RSS feeds – currently indexing 150k feeds : Which it then uses the power the Gnoos blog search engine to provide Australian blog only results; The unique business model is that blue chip Australian companies pay to access the blog and social network intelligence from the data, which includes when their company and product names were mentioned.

Gnoos also powers extensive content syndication for large media companies wishing to publish popular Australian blogosphere content. Clients log into a custom branded web based secure extranet with their own branding and set of topics and keywords. This is a unique offer in the intelligence and content syndication space. By indexing 150k media and blog sources, gnoos indexes far more content sources than competitor offerings.

We aim to grow this to 1m feeds within 6 months, at which time we aim to have a new consumer version of gnoos (finally) available, as well as a developer API so they can mashup the Aussie blogosphere and widgetise the content. Blog search in itself is not a business, as technorati proved. Blog search didn’t solve a real problem, and didn’t package up a digestable RSS product in the way FriendFeed or Dave Sifry’s new Offbeat Guides seem to.

• Please define metrics for success for your business?
We look at traditional business metrics : Proposals out to market; Percentage likely to close and Forecast Revenue and Cashflows, with tracking of expenditure against this. It was important our business was already due diligence ready with audited financials, and appointed accountants and lawyers. You need to be always ready.

We are on track for over $1m in revenue for CY 2008, with more than half of that revenue locked in. Since Facebook hit mainstream adoption, brands realise they need to have a social networking and web 2 product in their portfolio. We are looking to go to the next level of the business through launching a new version of gnoos, an API for the Australian blogosphere, and extended enterprise offerings in the user generated content syndication and intelligence space.

Acquired companies such as Pluck.com bought by Demand Media for $75M and Sphere.com bought by AOL for $25M-$35M - who have similar offerings - show there is a market for the enterprise intelligence, syndication and community offerings we currently offer and want to develop further.

• Any external funding – from VC, Govt, Self funded
The business was self-funded by Family and Founders for the first 2 years through the use of a $200K debt facility. Feedcorp did a Series A Angel round of around the same amount in May 2007 incl co-founder of Hitwise Adrian Giles, plus high net worth individuals and is currently raising $800K for its Series B round, of which one quarter is subscribed and is in advanced discussions to close the remaining amounts. So it’s taken us about $500K to get us to where we are, over 3.5 years; Which is a lot cheaper than what it cost to run a digital business in the dot-com period. But it’s not peanuts and good engineers, designers and project managers are all $80-$120 per hour cost lines, even with the benefit of equity and working on cool cutting edge projects. Unfortunately the banks in Melbourne pay engineers a lot of money to keep their online banking online, and a 9-5 job can be quite attractive to some people. Which is unfortunate because a lot of technical people’s skills are only getting semi-up to date by the programming they do on their own projects at night.

• What services do you provide for customers?
After 3 years of operations in the web 2.0 space, through trial and error, we have learnt what products customers will pay for, that we can deliver and scale, with good economics : That being powering online community and user generated content for media companies. As well as providing syndicated user generated content from the Australian blogosphere. Further, financial institutions and other blue chip brands are paying for our social networking intelligence offer, which provides them with a hosted secure extranet webpage where they can track if their name is mentioned on Aussie blogs, twitter and social networks.

Demand for these 3 products (community, content syndication, social network intelligence) has grown rapidly with revenue for the last 3 quarters doubling quarterly; $54K (Sep 07 quarter) to $96K (Dec 07 quarter) to $209K (till March 08 quarter) - The intelligence and syndication products are driven by the investment we made in the gnoos.com.au blog search engine. The benefit of Series B investment will be ability to upgrade the back end RSS infrastructure, as well as expand the sales pipeline, which at the moment is well over $3m.

• What type of customers you are targeting?
Customers we’ve worked with include large publishers such as business units within News Ltd, PBL Media, large media companies, digital agencies and online startups in high value verticals. We’re currently seeing the most demand in media, travel, automotive, financials, classifieds, and sporting clubs.

• What sort of marketing you are using to spread the word?
Personal and company brand building using blogs, twitter, talking at conferences and interviews like this ! The most important marketing however is to traditional decision makers who read BRW + AFR, but are high unlikely to use Twitter or Facebook J For these people, our CEO Pete Burley and myself have done over 60 meetings with a qualified sales pipeline of over $3m. In these meetings a lot of time is spent educating clients about social media, and what types of tools they can use to participate in the conversation. You can’t beat hitting the pavement, day in, day out. We try and use well presented documentation that clients can understand. We also spend a lot of time with investors, where we do similar explanation of our business, with more of a focus on the business model, expenditure requirements and competitive scenario.

• What is the monetizing/revenue model?
Gnoos draws its revenue from setup and licensing revenue from its (hosted) intelligence and syndication offers. It also through Feedcorp offers a complementary community offering so a clients end user can create conversations around the syndicated content. Setup fees average $25K for intelligence and syndication; Up to $150k for community projects. Ongoing licensing fees are $2500 to $10k per month depending on the offering.

• Which are the main competitors or major players in this market segment?
Gnoos is the only blog search player with a dedicated index of Australian and global blogs and feeds. Neither google or technorati index Australian blogs solely. And other Australian offers don’t index globally. Indexing RSS is very hard though and we aim to major upgrades to the number of blogs we index (from 150k to 1m), the way in which the content is categorised (our enterprise clients want to slice n dice the data by location as well as product/brand name mentions) So we’ve got lots of work to do and to date our team of 6 engineers has been focused on the paying projects. So it’s a balancing act between back end investments and front end client work.

While we are just based in Australia presently, the same “localisation” issue applies to every other country such as UK, Germany, India, US, Singapore, Japan etc – So these are attractive markets for us, the same applies in the online community tools provision (+ blog syndication) where large publishers such as UK newspapers want to syndicate local content and embed tools in their sites. But we’ve definitely learnt we don’t want to be a Web 2.0 web developer, nor are we trying to be ning.com or google alerts.

Overall the blog search space is being subsumed in parts by google.com’s universal search. As a result, while blog search is important to Feedcorp, the next version of the site will be focused on having the most popular browseable blog (and mainstream media content) and the ability to filter it by location and topic, as well as personalise it.

So rather than compete directly in the search space, we want to be positioned more in the “hyperlocal personalisable news” space. A bit like http://www.outside.in (in effect similar to the tool that our publishers utilise) In this way gnoos.com.au will become much more like a hyperlocal theage.com.au or news.com.au – However it will include all the latest breaking blog news (and each of the categories to read thru such as travel, finance, auto, sex, politics, tech)

Unlike newspaper websites the next version of gnoos will have the ability to subscribe and personalise, as well as search. The original vision of gnoos was heavily focussed around the ability to use RSS to subscribe to feeds, topics, peoples and locations you are interested in, then when you login next time receive updates on what you have expressed interest in. It just happened that Search was the first feature we bit off. If you use google reader, the experience will be similar to this, however your feed reading will be setup and you just add and delete feeds, topics and locations you are interested in. Further, the ability to “share” and “clip” content you find interesting on gnoos, onto your blog/facebook/twitter/tumblr page is important as alot of blog search users want to blog about a topic once they find a relevant weblink. Again, we need to make this easy for gnoos users.

As you can see we want to build out the service away from the pure blog search space, and much of the functionality and algorithms we’ve developed in the enterprise space we want to apply to the consumer. (and vice versa)

Further, with funding, the aim is to create a developer API For gnoos.com.au so for non-commercial use developers can create mashups of Australian blog content eg if someone wanted to create an Aussie Politics Blog Website or Latest entertainment gossip (or overlay a google maps interface with Aussie blog content) This API should also stimulate media publishers who are interested in using Aussie blog content and want a quick way to get to experiment with content before going to market.

• What are the main technologies used behind this venture?
We’ve been an open source orientated company from inception : Using Wordpress Multi-User and MySql for our community projects with structured blogging and mh-reviews microformats for user generated reviews. On the search side we’ve used Lucene and Postgres running Java. For the mirrored enterprise deployment which runs separately (and doesn’t have the same speed and indexing freshness of gnoos.com.au which we should have fixed shortly) we’re very happy with the Django framework and Amazon web services.

• What’s your thought on being an entrepreneur? How tough it is to start a venture in Australia?
Feedcorp. is our company website which details the latest projects we are working on. My blog also captures my end of day thoughts in running a business a 24 hour flight from the optimal place to be doing it – California. There is an absolute lack of early stage specialist Web 2.0 and online investors like Mobius, Union Square, and Y-Combinator in the US. The benefit of Australia though is lack of competition. But the biggest challenge in running a worldclass online business is lack of skilled engineering resources downunder. I want to grow my RSS index from 150k feeds to 1m in the next 6 months, and run machine learning queries on top of the index to power my intelligence and syndication services to Corporate Australia for example : But I need RSS and search engineers to help me achieve this. Please contact me thru my blog if you are an engineer up to this challenge. If you do, it will make doing this interview worthwhile :-)

Thanks Ben for sharing your thoughts with us. All the best for future.

For coverage on other Australian startups, innovation, tech trends check this out and our coverage on interviews can be found here



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