Nothing came of it, and talk of any spinoff has quieted since then. What did happen: Ask.com homed in on developing Q&A technology that used a hybrid of search technology and human responses to queries. It farmed out its search functions to an unnamed third party, and has quietly been building its offerings in content discovery via its Q&A format. Ask.com billboards have been popping up around Silicon Valley, and now it has struck its first acquisition in years. Ask.com on July 2 announced the purchase of nRelate, a tiny New York "content discovery" startup that helps publishers link to other relevant content, circumventing the need for a user to head back to a search engine to dig deeper into a topic.
No terms were revealed on the deal, but it's the first transaction Ask.com has announced since 2008, when it purchased Lexico Publishing, the owner of Dictionary.com. The Daily Deal's Olaf De Senerpont Domis spoke with Oakland, Calif.-based Ask.com CEO Doug Leeds and nRelate founder and CEO Neil Mody about where Ask.com is now and what the acquisition means for its future.
The Daily Deal: Give us a quick rundown of what Ask.com does now.
Doug Leeds: We're just coming off record profits and revenue, with 35% year-over-year growth [IAC/Interactive doesn't break out Ask.com results]. We've had a very successful last couple years, which tracks our strategic move from doing search and rivaling Google and focusing instead on question-and-answer and being a supplement to Google. We can't compete against Google. In 2010 we cut all ties to Web search technology and switched to a third-party's technology [Leeds declined to identify the provider, but it is widely believed to be Google].
People have flocked to us, whether they come from Google directly or from across the Web.
We use a community of people to answer questions, and we crawl the Web with our search technology and we license content. We do all these things to provide a Q&A experience. We're still a work in progress, but we are providing better answers to more questions, we have 65 million unique users a month, and we're a top 10 site in the U.S.
What has been really interesting for us is that, as a search engine, you want people to come to your page and then leave quickly. As a Q&A site, we found just the opposite: The most satisfied users are the most deeply engaged on our site. Kind of like Wikipedia, where you find yourself spending a lot of time clicking on the next thing. We really have to get good at providing the next thing the user wants to see in terms of content. It's a general problem publishers face, and nRelate is a company that focuses on driving that deeper engagement for publishers.
How did the nRelate deal come about and how does it fit into what Ask.com is building?
The deal stemmed from us looking at how our users behave. NRelate is the second biggest in this area, with Outbrain the biggest in the space. We talked to all the companies in this space, but with Neil the cultural fit was right. He was looking at another round of funding, but we thought our resources could help him strategically. Not just the cash, but the technology we had developed, which fits hand-in-glove with nRelate.
Neil Mody: Both of us are very publisher-centric companies. In 2010 nRelate hit our stride in the blogosphere. We are now on over 35,000 sites, with 150 new sites signing up every day. We really feel like we can deliver some value over the whole spectrum of publishing. Ask.com has done some tremendous work in Q&A, and we can piggyback on that.
We raised an angel round last year, and were just about to sign some term sheets, but this [joining with Ask.com] was the best road to see our vision grow.
Does this signal a new acquisitiveness for Ask.com?
Leeds: The last company Ask bought was Dictionary.com. We're definitely looking now; we're more acquisitively minded that we've been in years. We're looking at new opportunities rather than trying to fill gaps. We've done a really good job of focusing on the Q&A mission. Some of the things we've built to service that can have broad applications, so there might be other opportunities in that.
Obviously there's been a lot of speculation as to whether IAC/Interactive would spin Ask.com off. That seems to have quieted down, but should this acquisition dampen that notion or add fuel to it?
I don't have any comments on what IAC's plans are for Ask; my job in operating the company is the same either way. I agree there hasn't been any talk about this in a long time, but I wouldn't view this acquisition or our strategy as being motivated one way or the other by the corporate structure or culture of IAC.
Where else are you looking for growth?
Mobile is becoming the biggest runway for growth and makes us particularly excited about this combination. Mobile is a lynchpin as to why this makes sense, and we are looking to increase our audience on mobile.
One of the first things that was ported over to mobile has been content discovery. It's much easier to format for the smaller form factor than ads or the commerce funnel. The format makes it harder to jump from content to a search engine and back to other content. The ability to move directly to relevant content from the content you're reading now is key.
Thomas Montag was named sole chief operating officer at Bank of America Merrill Lynch. For other updates launch today's Movers & shakers slideshow.
Andy Levine, an M&A partner at Jones Day in New York, believes that increased buying activity by Chinese companies will be a key driver of global M&A over the next decade. The Chinese have been big buyers of natural resources in Australia, Africa and South America, and Shuanghui International Holdings' purchase of Smithfield Foods last year was a sign of China's increased interest in U.S. companies. The deal stirred some protectionist rumblings in the U.S., but CFIUS approved the transaction, and Levine believes that decision is a positive sign for the future of Chinese M&A activity in the U.S. More video