How CrowdGather Raised Money Via The Public Markets Instead of Venture Capitalists

I’m always on the lookout for entrepreneurs who took uncommon paths to build their businesses. That’s why I invited Sanjay Sabnani to talk about the way he raised money for his company, CrowdGather, from the public markets doing a reverse merger with a shell corporation. Since I always admired how the Wall Street Journal explained even the most basic financial transactions (like short selling), I made sure to ask Sanjay to clear up anything that you might have questions about.

We also spent a lot of time talking about the business opportunities behind online forums and message boards, since CrowdGather’s mission is to bring together and improve those communities.

Sanjay Sabnani

Sanjay Sabnani


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.



Full Interview Transcript

Andrew: This interview is sponsored by WuFoo, which makes embeddable forms and surveys that you can add to your website right now. Check out It’s also sponsored by, where you can create an online store right now, within five minutes. And have all the features that you need to keep selling online. Check out And it’s sponsored by Grasshopper, the virtual phone system that entrepreneurs love because it has all the features that they need, and can be managed directly online. Here’s the interview.

Hey, everyone. It’s Andrew Warner, founder of, Home of the Ambitious Upstart. And today I’ve got with me an entrepreneur who raised money for his business in a new way. I invited Sanjay Sabnani, founder and CEO of CrowdGather here to Mixergy, to talk about how he took his company public, and how he raised money for the company with a reverse merger. And this is not something that a lot of people talk about. And it’s not done that often. But I think it’s done enough that we need to know about it as an option. And I invited Sanjay here, who’s going to talk to us about his experience with it at CrowdGather. Before we start, I think we should first talk about what CrowdGather is. What’s the idea behind the business?

Interviewee: Sure, thanks for having me on, by the way, Andrew. CrowdGather, as the name implies, that’s our mission. That’s our vision. It’s basically to gather a crowd. To gather the largest crowd on the internet. And we’re doing this, basically, by focusing on, and acquiring, smaller crowds. And when I say crowd, I’m referring specifically to a very old type of online property. In fact, the type of property we focus on pre-dates the internet. Right? We’re dealing with forums or message boards. And you know, the great-grandfather of the message board was Usenet. And then the grandfather was the BBS services. So in essence, there’s a long legacy and history of this type of site. We focus on them for several reasons. One, because since 2002, when I acquired my first forum, I had a lot of experience in this space. It was a referred to as what we in the industry call a “Big Board”. And it kept growing. In 2003, I had to put it in an LLC. In order to deal with complaints, on one hand, take down notices on the other, credit card processing. And as this site grew, at one point, it was in the Top Ten Forums in the U.S. It’s still in the Top Thirty, but what I realized was that there was a big disparity between how I was getting treated, even though it wasn’t my full time job, and how people with other, you know, perceived as cooler sites, or Web 2.0 sites were getting treated. And so this made me a little aggravated. And I decided that the way to solve this problem was through basically gathering the crowd. Collective bargaining, in essence. And the easiest way to do that, as opposed to going to people who don’t know you, and asking them to do business with you, the easiest way was to basically build critical mass on our own. So we started acquiring forums. I started doing this in 2007, 2006 and ’07. And by the end of 2007, my moonlighting gig, my hobby, was all-consuming. And I really couldn’t focus on the day job anymore. So I took a leave

from a position at a public healthcare company.

Andrew: Hmm-hmm.

Interviewee: Again, a, you know, completely random move. And I decided to make a go of this full time starting in 2008.

Andrew: OK.

Interviewee: So that, in essence, is what CrowdGather does.

Andrew: And the idea is to raise enough money, and build a big enough business, that you can roll up all these other forums, and then have it, have it enough of a size to have more impact than you would if were just a smaller forum?

Interviewee: Impact is one thing. I mean, I have to tell you when this was private, and this was my, you know, my personal company, my personal site, I had visions of sort of building an online country. You know, you get addicted to this. You’ve got friends all over the world. Wherever you go, you’re meeting with people. So, it is quite addictive. And this was before the Facebooks and other things. Right? We were dealing with real-time dialogue, deep social networks. But everyone had a weird, imaginary name. The focus, the business focus, is simple. Almost any site gets paid on the basis of “per thousand page views”, or “cpms”.

Andrew: Hmm-hmm.

Interviewee: Right? Forums, in general, even though they’re laser-focused, and they’re targeting for a subject, do a little bit better than adult websites and gambling websites. Right? They are treated right at the bottom, in terms of display advertising. And there’s really no reason for that. And what I noticed was that there was a huge arbitrage. A lot of these sites are making 20, 30. 40, 50 cent cpms. TechCrunch, New York Times, 25 dollar cpms. Glad Networks, Federated Media, 30 to 50 dollar cpms. So to me, the opportunity to do a little bit better than 50 cents, and it doesn’t matter if it’s anywhere close, to the 50 dollars, right, was a financial opportunity, and a motivating one.

And what I realized that the key value proposition here was the larger the advertiser, the more the money, the less time they have to go find and chase amateur hobbyists, try and sign up contracts with them, try and deal with sending them money. So by being a corporate umbrella what we’re really doing is aggregating site within certain vertical channels so video gamers for example or mobility and gadgits for another example. And at a certain point the advertiser doesn’t care if you have 10 million monthly patrons on one site where they’ll pay you a premium or 10 million monthly patrons spread around 20 sites as long as you have quality control, good policies, they’re comfortable, you know there’s nothing illegal going down on your site like downloads or hate speech. So if you can package these sites and present corporate responsibility you are able to sign bigger tickets and move up that value chain and hopefully earn higher CPM. So there was a very simple, old fashion model here that drove me to making this a job and a business.

Andrew: Ok, I was going to ask you why they get low CPM’s at forums, and you gave a few reasons that there’s concern about downloads–that people are going to be offering illegal content on those sites, hate speech is an issue–advertisers don’t want to be associated with that. Size of the forum is an issue, they don’t want to deal with a bunch of smaller sites if you can give them a big package, then they’d be happy to sponsor and increase their rates there. But what else? Are those the only reasons? Why is it that forums even though when I do a search on Google I end up on a forum, and the forums are useful, and when I’m active in a forum, I feel like it’s my world, it’s my community, my friends are there. Even thought it has all of that going for it, why the CPM’s as tiny as you just mentioned earlier?

Interviewee: I think the primary driver there is ignorance–ignorance based upon history and fear, and to clarify that it is important to note: those of us that were online earlier rather than later. If you joined the internet because you got an e-mail to join Twitter and that’s your experience, that’s a very different one than I had and many forumoners had…back in those days, the entire world has changed. People are comfortable now having a picture up online, their comfortable having their first name and last name on facebook, right? Things we now take for granted such as using a credit card for e-commerce transactions on the internet, not worried about somebody coming to your home and murdering you because they know where you live. So a lot of things have changed, but the advertising mentality towards forum, forum communities, was established back in the 90s and early 2000s and there’s still legacy fear. This is why my number one mission whenever I got out there and am speaking to anyone. My basic premise is use the “f” word, alright, I want everybody to use the “f” word, and by “f” word I mean forums, because they are almost treated like a dirty little secret. You will see ad networks that if you go to their terms of service they will say, “we do not accept forums.” Well there are masts of sites– which was acquired for $115 million by Liberty media a couple of years ago. It’s the world’s largest body building forums. They happen to sell vitamins and nutraceutical products, but that’s really their core. So you will find there is this discrepancy. People that own forums and say, “I own a forum” get rejected. People that say “I own a major site that happens to have 85% of its traffic on the forum are brought into the door.” Right? So I think there is a shift that is going on, and the advertisers and the media buyers really need to catch up and start using the “f” word more.

Andrew: I was going to invite you to just say whatever word you wanted. I didn’t realize you were going that way with that–with the “f” word.

Interviewee: It’s “forum.”

Andrew: In the audience, Kerstin Winkler is saying, “yea, forums are kind of a dirty word, good point.” So she is noticing it too. I’m noticing that also. But I’m wondering if any of it is earned. Is it that there are a lot of forums that anything goes in. Is it that we have established a community that’s based around fake names, and it is hard to go back, and once you got fake names, anything goes? And so, are any of these advertisers right to be afraid?

Interviewee: Yes. There is a valid concern, and it arose interestingly enough from a Japanese phenomenon. In Japan, they used sort of a hybrid version of a forum that is referred to as an “image board.” A site called Tuchan is legendary in Japan. It’s probably the busiest forum in the word, in that loose usage of the term. And of course in the US we have our very famous Forchan, where everybody is anonymous. You know, every time you read the newspaper they’re going up against the church of Scientology, or they’re hacking somebody, or steeling corporate documents. In the early days…

Interviewee: In the early days, the predecessors to bulletin boards were Usenet groups; people were researchers, talking to each other, so there was a lot of civility and politeness. And in the middle, the pure freedom that the internet represented, right before people knew how to track your IP address, and find out where you were when guys like Kevin Mitnick were hacking radio stations, right? There became a cloud of suspicion and fear, because for whatever reason, hackers hang out on forums, identity thieves hang out on forums, well, parents of twins and triplets hang out on forums, too. The key is that forums are the best places for many-to-many communication, around a topic or idea. So, we have to be able to separate the good and the bad and I think that therein lies an opportunity for a company like CrowdGather, because what we can simply do is help forums get that good housekeeping stamp of approval that you’ve got kosher privacy policies and advertising policies, you do not accept hate speech, we are verifying that you do not have private VIP subforums with adult content or Bittorrent download piles, so, I think that there are some valid concerns, there are some entities out there that are purely for fun and entertainment, but the ones that are subject matter specific. We own a site called Guess what they talk about? And if you went through the Suzuki subforum, guess what type of motorcycle they’re talking about there? That form of architecture, that taxonomy is just basic scaffolding for humans to interact with each other on subjects of common interest. And so we think we need to separate the scary forces for the advertiser, and aggregate, and unite, the happy forums. The ones that are great for advertisers, that generate the best, highest value, user-generated content on the internet.

Andrew: Okay, I’m gonna keep talking about the business even though I promised people that we’re gonna talk about the way you funded the business but I think it’s important to know about the business, to know about the vision, the needs of the business, the first steps before we understand why you go for the funding you ended up with. I think it’ll establish an understanding that will help later on. So, let’s go on to a question that somebody in the audience asked, that I should have asked, which is “What kind of people run these forums that you are buying? And in fact, who’s running forums in general?” And I know the answer’s everybody, but the kind of forums that you’re looking at, the average forums, who’s running them, what kind of people?”

Interviewee: There is such a wide diversity, obviously, there is a little bit of sophistication required but forum software is available for free to a hundred and sixty dollars for a license, a domain name costs ten, twenty dollars depended on who you’re buying from. Hosting for an average start-up forum might be four, five dollars a month. Because there’s really no barrier to entry, everybody starts forums. In the early days, it’s fair to say, that people who are just organizers by nature, whenever you’re part of a non-profit association, there’s somebody that takes care of the newsletter, there’s somebody that does the sign-up sheet, so I think people with that personality were the ones who said “Okay, let me put up a site where people can talk to each other.” There is obviously a high predisposition towards folks in the IT space, one because they know how to install software on a server and turn it on, secondly because they’re in front of a computer all day. And now, all of us are in front of a computer all day, but if you go back to the 90’s and early 2000s, there were people that had good pipes to the internet, and access, and were fortunate enough to be dialed in all day. And those of us that had to wait, and you know, hear that modem handshake and dial tone and log on once in a while. So, there was a heavy skew towards IT professionals, but if you look at the subjects out there, a lot of the parenting forums out there are started by moms. Now they may pay somebody, two, three hundred dollars to turn on the hosting account and the forum on it, but we have not seen any kind of probability. We acquired a site from a gentleman here in Orange County. During the closing, I had a suspicion that perhaps he was misrepresenting himself, so our CFO called him up and said, “Listen, how old are you?” and he basically confessed he was sixteen. So that was a little scary because you can’t do a deal with a minor in the state of California, but we asked for Mommy and Daddy’s

credit card and signatures, and we bought a site for $62,000 from a sixteen-year-old for one of the leading communities on Microsoft Zune, in fact, it’s ranked page one in Google for the word Zune. Now, I have children, and I would be a proud parent if I found out one day that one of my daughters had set up a site on a hobby, and just brought in a nice chunk of cash to help pay for college.

Interviewee:(continued) my daughters had set up a site on a hobby right and just bought in a nice chuck of cash to help pay for college, so there’s a huge diversity of peolple.

Andrew: Ok actually I love hearing stories like that, do you have another story about an early company you bought, and by the way, actually before I get to that, you said sixty two thousand you gave him for the business?

Interviewee: sure

Andrew: Was it cash? Was it debt? How was it structured?

Interviewee: It was cash.

Andrew: And was this before you guys were public?

Interviewee: It was after we were public.

Andrew: Ok.

Interviewee: You have to appreciate that you know forums there is a methodology to valuing them based upon revenues, based upon domain name value, search engine strength, And so we have done transactions that are hybrids of stock and cash, But I’m not going to assume that a sixteen year old or even an eighteen year old is going to really understand the paperwork involved in being compensated in equity, right so a lot of our transactions are cash and I threw out that price because it is in the public record, there was an article in an Orange County newspaper, because they were fascinated by the fact that a minor had built up and sold a tremendous online property.

Andrew: Do you have an example

Interviewee: (Interrupts)But it goes to you point sorry

Andrew: No you go ahead

Interviewee: I said it goes to your point that I don’t really have a way to lump all these people together that are forum owners.

Andrew: Someone in the audience is saying that I need to interview the founder of ***Forchan*** here on mix review I don’t know how to get a hold of him. I know that Alexis O’Hanyan who I interview in the past knows him,But I don’t want to keep going to Alexis O’Hanyan for everything. So if anybody out there knows him including you Sanje, how I can reach him, I would love to ask him for an interview here on mix review.

Interviewee: Yeah I would not know, his user name is Moot on Forchan, and I think his real name was Albert in the Time magazine article about a year and a half ago.

Andrew: And he’s going to be speaking at Ted thanks to Alexis O’Hanyan, so he’s out there. I going to wait for someone to make the introduction so that it can.

Interviewee: (interupts) He was he was at **** Rothel com*** a couple of years back, I dont know if he’s presenting at this years Rothel com but yeah! He shouldn’t be hard to find.

Andrew: How about another example of a company that you bought before you guys were funded, before, back when you were just getting started

Interviewee: When I was doing this privately, keep in mind my educational background is a BA in english literature, so me and servers and technology you know get along very well when I’m reading articles about them, but not when I’m actually trying to implement them. So in my enthusiasm I want to build this world on the internet, I would just scour other message boards and look for sites that were available for purchase. So I found one that was called Forum Junkies, right I figured ok it’s people who like forums, I like forums, So what happened was I agreed to a price with the owner, he helped me to move it to my server because I didn’t even know how to do that, and low and behold after the transfer I go to the site and I see content being deleted in front of my eyes. So I start freaking out, turns out that the person who was the admin on the site that was the working guy, was a little bit annoyed that he didn’t get his share of the, I think it was only two thousand dollars. So there was this sort of just, bitterness there, and I was told very kindly that they were basically leaving, all of them, so I bought a community where everybody left and they launched a site called forum So I’ve actually had a mass exodus in refugee’s, so there’s a lot of crazy stories in our space but you know the good news is by doing it on my own, with my own capital, I learned how to paper up the purchases.I learned the controls.I learned definately to make sure the moderation and administration staff knows fully well what’s going on and they are ok with it, right, so there was a lot of learning involved yeah there’s no shortage to drama when your’e dealing with forums.

Andrew: How do you maintain a community when, when it’s just so easy to leave, when people are fickle, not fickle but theyr’e loyal just to that community and if you change it even a little bit I noticed that it dosen’t feel like home anymore, and they just don’t come back?

Interviewee: This is it’s a fantastic question something we have to ask ourselves all the time, because we will see, you know, there were times when I would by a community that had great page ranking, huge inventory of great content that was bringing in long tail searches, and my thought was hey if I could just get five people to post everyday it will come back to life and it didn’t happen. Right so community dynamics are a very special thing. What happens on forums, that I have noticed at least, right I dont have a clear answer for people, what I have noticed is that generally people wand around subject matter expertise, right and those relationships that they build with each other actually turn into friendships. And that is really the stickyness of the site.The content is one thing but the fact that you all like

Interviewee:…like the same subject, allows you to be closer to each other, right, because your sharing your knife collection or talking about your fish tank…well your talking about your 150 gallon salt-water reef, next thing you know you posted a picture, right, your kid happens to be in the pictures, another member has a child… What happens when people leave though, there’s two big phenomenons that I’ve seen: One is people graduate from forums. When a forum goes beyond being about the fish tank or the motorcycle, and you’re there because of friendships and perhaps because you’re laid off, you’re bored, you’re going through a divorce, so this becomes an important part of your life. Well when life gets better, you’re doing the right thing which is going out and getting some sunshine, and not talking to motorcycle buddies even though you haven’t bought a new bike in fifteen years, right? The other thing that I noticed which occurred the past two years which is significant, and I think many forum owners will attest to it,and if you look at charts of traffic…many different things came on the internet, you know, things like Youtube, but Youtube is shared on forums, right? The videos are embeddable. Last 18 months for the first time, the combined phenomenon of Twitter and Facebook I think took a chunk out of forum traffic, right? We did not see a decline in uniques in any way, so it’s not that people aren’t looking and finding, what I believe is occuring is that in the old days when MySpace was first getting big you would hear that MySpace was the only category of site that had deeper engagement and click through rate than a forum, cause on a forum, there’s only so many words you can fit on a page, so you’re always hitting next page, next page, next page, right? I think what’s happened is new people are coming, they’re asking questions, they’re being answered, but people now spend more time on the internet and have more friends on the internet and have more things

to do. I noticed this with my own behavior. As of two years ago I was harldy on Facebook or MySpace, but now even though I have this huge network of forums that I spend time on and I need to spend time on, I can’t help but check my Twitter and check my Facebook as well so…

Andrew: I see.

Interviewee:I think they’re two forces that just came into the mix and have now balanced that. For decades…for a decade at least, forums were the only thing with real-time activity and traffic. A busy forum gave you all of the benifts that many people are just beginning to experience on social networks without all the pretty pictures of course.

Andrew: (laughs) You know what something else that you said…this is our second interview, I don’t know if I said that earlier in this interview, but…the first time you came on, you pointed out to me that when you register for a forum, you’re often asked for your ICQ name. Now who eve has an ICQ anymore? What kind of question is that? There’s no…there’s no way to login using your Twitter account or your Facebook account, but they’re asking for ICQ. And as I looked through it, I realized that the software is a little outdated, that it’s been awhile since there was a major overhaul of forum software, and it’s just…it’s not catching up with the way that we experience the internet. What do you think of that?

Interviwee: Kay, and it’s interesting since that last conversation, and it’s still a default field in your profile where you can add your AIM, Yahoo Messenger, MSN, and your ICQ number. What has happened since then is there are many forums now that allow you to log on with Facebook Connect, right, or your Twitter ID, but the point that you make is valid. Forums are old, kay? Now there’s a ceratin part of that age and longevity that should not be messed with…the index structure, the taxonomy, the organization is perfect, right? And I say that because if you were to take the top minds in the world and say if I want mutliple people to speak to multiple people, many to many communciation on a mutual topic of interest, you’d end up with what looks like a forum, kay? That said, the reason forums seems to be obsolete and are missing a lot of the features we expect is because think about it, they existed before the internet, right? There were dial-up bulletin board services; someone said, okay, I’ll code it in PHP now, right? You may have improved languages, you may have improved display layers, but nobody has thought about forums as though they existed after a networked world, right? They used to be point to point. You dialed up to a phone number that connected to a bulletin board service. We are working on basically redoing forum software, it’s one of our ambitions, for the first time from the ground up with a very simple premise: pretend you are building the software that is perfect for many to many communciation, but pretend you’re doing it after you know about the internet, and surpisingly we don’t think anyone has done that.

Andrew; I’ve got a couple of…a couple of…

Andrew: I’ve got a couple of other sites that I’d like to ask you about. The first is What do you think of their overhaul? Of the way that they’ve overhauled forums?

Interviewee: Sure, we do not really use their software, but I have followed Lou Cimmo, and I know that he received a half-million dollar VC raise recently for VanillaForums. I think what they’re doing is admirable because they are improving the user experience. They are making things more intuitive. You know, they’re basically trying to make forums, do for forums what WordPress did for blogs. Right? Which is great. But I don’t believe them, or anyone else, is re-thinking fundamental information architecture, from a network level. Many of us that own large forums wonder why we can’t take all these people that are interested in, maybe another subject. And instead of adding yet another sub-forum, and building an endless index, why can’t we use these folks to populate a new domain and a new forum? Right? Why can’t I, as an owner, centralize my subscribed threads? There’s thousands of RSS readers. You have not seen a single forum thread reader aggregator product. Why are my message box spread all over the place? And even as the owner, I didn’t know what was going on, unless I checked every site separately. So there’s a lot of network and management and administration efficiencies that are needed. Because what happens is, forums are addictive. People who join forums end up joining many forums. So you need to make it easier for them to have a one-click, “CrowdGather accepted here”, and they could be part of that forum. And people like me, that like to own forums, invariably end up wanting to build more forums, and buy more forums. So you’ve got to solve that as well. So I think Vanilla Software is very highly regarded. Many people are adopting it. And I think it is very user and owner friendly, but perhaps for somebody that’s earlier in the game. A lot of us use a product by Internet Brands, called “The Bulletin”.

Andrew: Hmm-hmm.

Interviewee: Simply because we have been through trials of fire with them. It was open-source initially, and then semi-commercialized. So a lot of portions of The Bulletin are written by the community, and have stood up to huge scale, in terms of server loads and volume. Right? That doesn’t mean that there aren’t more efficiencies that can be captured. As you mentioned, on the forum, you make the change, you can have violent rebellion and opposition. Right? We had a site where I changed the logo because I thought the logo was ugly. I didn’t know that the logo was designed by one of the moderators, who then promptly resigned,

Andrew: Ooh.

Interviewee: and just hated me for the rest of her life, probably.

Andrew: [Laughs]

Interviewee: Right? Because I didn’t ask. I have now tried to learn to ask, before I make decisions. And if there’s no winning, then I just have to make the decision, and take the abuse, so.

Andrew: OK. I don’t want to get too side-tracked here, but I’ve got to ask you a question that I’ve been curious about. In the past, if I were going to build a community around Mixergy, around any site, it would be forum that I would set up to do it.

Interviewee: Hmm-hmm.

Andrew: Today you’ve got Ning. You’ve got BBPress, I think it is, from WordPress. You’ve got StackExchange, which is a question and answer site from StackOverflow. You’ve got, who else was it, that somebody put here in the comments? HackerNews, which I guess is more of a news site, from Andrew S.G. But you’ve got all these options. Why forum, versus any one of these other options?

Interviewee: Forums may not necessarily work for everyone’s use case. But the truth is, they build themselves. Right? You set up a couple of rooms, relate it to the key thesis, where in your case it could be entrepreneurs, financiers.

Andrew: Hmm-hmm.

Interviewee: Right? See who shows up. You know, building a forum is like throwing a party. Now if you have a party where there’s capacity for 150 people, and there’s only two people in the party, it’s a dead party. And people will leave. Right? So similarly, you want to keep things tight, and expand your index and structure. So they are very expandable. But the truth is, when you do not have a core subject to tie people around, not a brand or a product, but a subject, it is hard to organize. And in those cases, a listserv, Google Groups, may do just as well. Right? So it’s not 100% that everybody needs a forum. But forums are very cost-effective, very easy to install, very easy to run. People have been on them. They know how they work. They know the etiquette. And if you look at things like Ning, major component of Ning is the forum aspect of what they do. There is not a big provider or site in the world. Look at AOL, huge traffic on forums. MySpace, insanely busy forums. Same with Facebook’s. The problem is when you take the forums, …

Interviewee: …when you take the forums away from the sites where the subject matter expertise resides, you’re potentially dealing with a lot of dumb people, right? I’m not going to go on a Facebook forum to ask about a pre-Civil War 50 cent silver piece, right? I’m not going to Tweet about it. I don’t think anyone on my Twitter list cares or knows that sort of stuff. I’m going to go to a numismatics forum and talk to coin geeks.

Andrew: Uh-hmm.

Interviewee: And many of them may have collections been purchased at auction, so I’m getting very deep wisdom. But I have to go to the place that’s gathered around the subject, and then talk to those people. You can’t just put a forum where you have a billion people online every second of the day and hope it works, because it’s too random, it becomes like a chat room.

Andrew: OK, you’re absolutely right. If I had an issue with my, let’s say the MacBook Pro that I’ve got here. And I took into Facebook or a general forum or a general audience, it would just blow up into a Mac vs. PC argument instead of addressing this issue that I’ve got. But if I take it to a forum where I know that’s what people are there to talk about, I can get an answer that’s directly related to my question and stays focused. And again, Andrew SG in the audience is saying that forums create conversations, StackExchange is about answers, HackerNews and those types of sites are about links. And PRZ is saying that he actually loves StackOverflow type of forums. And I’ve seen that too, that no matter what you do, a conversation will happen. I see conversations happen in the comments underneath some of my interviews. I see conversations happen on HackerNews. Instead of trading links, people will talk about themselves, and then start getting feedback about their work issues. But forums are more about a conversation, more about a party. You saw an opportunity and said, “people aren’t noticing that this is a big source of traffic in conversation engagement.” You said, “I’m going to start buying some of these things up, and unite them, and start improving the product.” And my next question for you then is, at what point did you decide that you needed to bring in more money into the business?

Interviewee: Well, since our core strategy was to basically buy enough forums to achieve critical mass, in terms of page views, uniques, in order to attract the attention of the bigger ad networks and advertisers. It’s very difficult to do that on retained earnings. Right? Any sort of capital-intensive business, or asset-intensive business, requires outside financing. So I realized that if I was going to go and realize this dream, I had to basically get capital, in order to execute.

Andrew: I see. So from the beginning, you knew that that’s where you were going to go. What options did you try before you decided on this one?

Interviewee: I spent all of my life savings, which is still not a very pleasant subject of discussion in my home. I took some loans from, you know, far-off relatives. But when I had exhausted what was immediately available, I realized that I had to basically pursue equity financing. And since I had been a senior executive at numerous small public companies, I was very comfortable with Wall Street, and that segment of the market, in terms of financing. So I decided to go that route.

Andrew: I’ve got to ask you, and I don’t know if it’s too early to ask this question, but what was it like when you were spending your own money, and borrowing money, and investing it in this business, and you still hadn’t seen the revenues? Or you still hadn’t seen the profits to cover it?

Interviewee: To tell you the truth, I was having the time of my life.

Andrew: Really?

Interviewee: You know, it…

Andrew: Am I the only one who sometimes goes through nights unable to sleep?

Interviewee: Oh, no. I’ve had plenty of sleepless nights.

Andrew: OK.

Interviewee: But keep in mind, while I was spending this money, the economy was good. I had a job that paid me more than double of what I’m paying myself now. Right? So there was a little more security.

Andrew: I see.

Interviewee: So there was a lot more breathing room. Right? But since then, yes, I’ve had many, many sleepless. I assure you.

Andrew: [Laughs] OK, about what? What kind of things keep you up at night now?

Interviewee: Primarily access to the financing. Also, when you get involved in forums, there’s really no way, in my position, not to be the bad guy somewhere, at some point. Right?

Andrew: Hmm-hmm.

Interviewee: So I’ve given up on trying to make friends with people. I want them to have a great community to go to. But if they don’t like the color of the logo, that’s it. I mean, nothing I can do. So in essence, I look at myself to forums what Vince McMahon is to wrestling. Right? He’s the arch villain. So if you Google my name in CrowdGather, you will find a lot of people that dislike me, on my own communities. And I don’t delete their posts. I just leave them up, because I’m proud of them, in a silly type of way. Now, their valid complaints, I do take down, and try my best not to repeat my mistakes. But it is a very ambitious project. And we’re eight people here, with 80 communities to manage. So, few more resources that come from capital, I think will give us the right mix, in terms of the talent that we need…

Interviewee: …in terms of the talent that we needed. Nor it handled what we’re going after.

Andrew: Now, I can’t believe that that can’t be easy for you to have this kind of backlash, because I know you’re in these communities, that being part of these communities was your fun. I’ve known you now for years, and you’d have people from your forums at your house, you’d engage with them, you’d have, I think you’d have a great time when they were making fun of you. I’ve would see these pictures that they would PhotoShop up, and it looked like a lot of fun. And I can’t imagine that the guy who loved that kind of community being hated by people in communities. And what that must be like for you.

Interviewee: The funny thing is that the place I am most hated is actually my original site,, which stands, is short for General Mayhem. And so, it’s just part of the package. You know, when you are in leadership, you have control over. I will get long, well thought out, private messages telling me some PhD student’s idea for an algorithm for user ranking and points. How am I going to implement this? Right, it’s really neat, but if I tell them, I almost don’t know what to tell them, why did you do this? In your reality, do you think that a suggestion… This is like me sending a message to Steve Jobs saying, “hey, look, the i-Pad would really be cool if you made a few that were double-sided. So I could hold it up and then someone in front of me could share…

Andrew: Ha-ha.

Interviewee: …I mean, yes, it’s a cool idea, right, but you can’t always implement these things.” So, yes, I take this all with a grain of salt. In my early days, when I was actually a member before I was an owner, I would have heated battles online. And to give you an idea of the dynamic, I acquired GenMay, within a thread on GenMay, where the two owners were fighting with each other.

Andrew: In the thread?

Interviewee: So my company, CrowdGather, right, is not only about forums, it exists because of a discussion in a thread that resulted in the purchase of a forum. My first two engineers at the company, are both members of GenMay that I imported to Southern California from South Carolina, right? So, it’s our inside joke, the irony of an Indian CEO with two Caucasian software engineers, right?

Andrew: Ha-ha.

Interviewee: Should be the other way around, but I am no good with technologies. So, it is what it is.

Andrew: OK. So now, let’s get into going public with this unique way. We talked a little bit before this interview to see how we can set this up, and I think the best way is to first… I know most people understand what it means to go public, but why don’t we just explain it for the few people who don’t, as background? And by the way, I thought maybe you could take that on.

Interviewee: Sure. Going public, in essence, when you start raising money from investors, you are issuing shares in exchange for money. And those shares represent a percentage of the company, right?

Andrew: Uh-hmm.

Interviewee: At a certain point, you have so many shareholders, and not everybody wants to hang out until you get acquired by somebody. Some businesses never get acquired, they’re doing fantastic. You don’t always want to take your profits and write dividend checks to those shareholders. So, by going public, you are in essence allowing for the shares of your company to be listed on a public exchange where others can buy and sell those shares. Therefore, those individuals in the company that perhaps want to sell their shares can sell them to an outside buyer. Someone in the company may want to buy shares, right? So, you create liquidity for shares. That’s really what going public means.

Andrew: Uh-hmm.

Interviewee: Right, it gives you access to this marketplace. If a stock trades millions of shares, that doesn’t mean the company’s any richer or poorer. That means its shareholders have had liquidity for that dollar amount, right? So, it’s a little bit of an abstraction, but you know, I think it’s very tangible, it is a marketplace for your shares. And by going public, you’re allowing your shares to be bought and sold by third parties.

Andrew: OK. All right, guys in the audience, what do you think? I think that sets up enough of a background. So then, let’s talk about, let’s introduce, what’s the best way to talk about this reverse merger? How about, why don’t I just ask you that, and then I will fill in the gaps by asking you questions like, “what’s the shell company?” And then we’ll find out about your own personal experience here. So, what is a reverse merger?

Interviewee: OK, let me take it a little bit before that, one step back. In essence, when you go public the traditional way is, the company grows, the business is bigger, and now you decide to do a sale of some of your shares, so that there’s shares to buy and sell in the market, right? In order for there to be trading, there needs to be shares available in the marketplace. That process is called an Initial Public Offering, or an IPO, right?

Andrew: Uh-hmm.

Interviewee: The company sells ten million shares for ten dollars each, $100 million comes into the bank, and now there’s ten million shares…

A hundred million comes into the bank, and now there’s 10 million shares for people like you and me to buy on NASDAQ or the NY stock exchange. A reverse merger, or a reverse takeover as they’re referred to in the UK, is a financial transaction that achieves the goals of having your shares traded on a marketplace, but it doesn’t really achieve the pomp circumstance recognition liquidity market makers that going in the traditional front door way does. What has happened is there are sometimes private companies that are stuck in economies like the one we’re in right now, where there is no window for public offering because there’s no appetite for younger companies. So what do they do they can’t wait forever for a banker to hopefully bless them and take them on the road and take them public and there may not be investors for them. However if they have the wherewithall they can basically get themselves onto a public exchange by looking for what is referred to as a shell company.

A shell company is a company that is public it’s filled out all the forms, it has, sometimes it has a symbol and a ?? sometimes it’s never even applied for a symbol, but it is fully audited, it’s financially recording, it has a board. So it is compliant with being public except it usually has no business in it. Perhaps they started a business, invested a little money, thought they would go and raise – any corporation can basically file the paperwork and go public and apply to have at least a symbol on the OTC or the pink sheets, you have to pay the fees.

Reverse takeover allows you to save that time of just filing and waiting and now you have a public company with almost nothing in it, you have a private company that has got a business and a business plan, and in a normal merger or a takeover the large company, large public company buys the small private company. In what we’re doing it’s a large private company and a small public company so in essence you’re taking over the shell and you emerge as a public entity. Now you didn’t get any money for doing that, you may not even have anyone know that you exist as a public company you may have no market makers, so a lot of this stuff has to be things you’re comfortable with and feel that you can get to on your own, because there is no research coverage, there is no goldman sachs helping you out right, so it’s a very different route, it can work for some people and it can be just misery for others. So everyone has to do their own homework in deciding which way to go.

Andrew: I’m gonna ask some questions from the audience and some of my own that I wrote down as we were talking, but I wanna get people an example of a guy did this who I knew years ago. Brad Greenspan, this is a guy who’s company ended up

spitting out myspace. Well, he did a reverse merger so that he can go public, he ended up buying a CD company, I think it was called CD Universe, and I think he bought a shell and it was some kinda motorcycle company or it used to be a motorcycle parts company or something, they’d been pretty much dead for years, it was just a shell. He combined the two, got a little bit of money in the business, and then he started going out to other internet companies and saying “I have shares, I’ll buy your business for shares.” And that’s the reason that he wanted to do it so that he can go out and just keep buying all these businesses for shares and start racking up all of their revenues and start increasing their CPM because now he has a bigger audience to sell and eventually he was able to take that and make it into ?? universe and i think eventually went down to the American stock exchange and he was able to list himself because of that and finally sell to Fox. So that’s one example why some people would do that and why this is – and how this could help. Let me take a look at the audience and see if somebody’s asking a question on this. I see somebody’s asking “Is there a place where you could find a list of shell companies?” I don’t think there is, you tell me if there is. I don’t think it’s possible, but I could be wrong.

Interviewee: I know that there are, if you did a google search for shells there are people that try and broker these sorts of transactions. Lawfirms may be able to research them but I’m really not aware. And again acquiring a shell just because you have a list of a shell you know people have to keep in mind that sometimes you’re paying six figures to buy something basically with no assets, the asset is the intangible value that it can be publicly traded.

Andrew: Ok, yes, you’re paying money to buy this to get in there or you’re giving them a share of the business afterwards but one way or the other you’re paying for this.

Interviewee: You’re paying for it, in shares or in cash you are paying to own as much of the shell as possible.

[this section needs work] Andrew: If you needed money, and you ended up in a financial transaction where you had to pay money, how did you end up with more money in the bank afterwards?

Interviewee: What we were able to negotiate, was to aquire the shell in exchange for letting them keep a certain percentage of the company and then we went to other investors that did a private placement in the new public company.

Andrew: OK

Interviewee: So it was sort of a multi-prong deal and it’s not easy to do. But again since I’ve spent a decade in the public marketplace, this was easier for me than how to find VCs and angels, and dealing with their structures and term sheets. This is the devil I know vs. the one I don’t. And as an entrepreneur, I’m sure you’ll relate to this, Andrew, at a certain point you have an idea, it gets bigger and bigger, you’re pregnant with the idea, you’ve got to go and have the baby. Right? So, I was pregnant with a bunch of forums and couldn’t think about anything else, and I had easier access to getting money if I made this company publicly traded, then if I didn’t. If I didn’t go that route I may not have raised any capital, so I had to jump.

Andrwe: How do you find a lawyer who can help you find the Shell company, and possibly help you find the investors who are looking to invest in companies like this?

Interviewee: Usually the types of attorneys you deal with once you are public are usually referred to as securities attorneys. So they aren’t corporate attorneys but they have securities experience, which means they know how to deal with the registration and sale. [/this section needs work]

Interviewee: Because they’re not doing it out of charity. They’re looking to make a return. And they can maybe sometimes tell by how insane you are about your idea, that you’re going to pull it off.

Andrew: Can you talk a little bit about the kind of investor who invests in businesses like this? Are we talking about people who are looking to just pump up a stock, and get out of it? What kind of person are we looking at here?

Interviewee: You know, the way the market has been lately, you know, just like when you asked me who invests in forums, I have known companies that have done reverse mergers, and raised money from their customers. You know, people that drink their soda or go to their microbrew. Right? So there’s no “one type fit all”. In my case, it really was folks from Asia, that I had a long-term relationship with, that had been involved. You know, a lot of us. I worked in corporate finance, and in the brokerage industry. And so a lot of them understand the public markets, have made money. They’re obviously all much wealthier than I am. But there’s no specific type. Nobody expected, when this deal was done. We did it in April of 2008. There wasn’t a thought in anyone’s mind that the market wouldn’t be as much fun as it was at that time. Right? So the summer happened. Lehman Brothers went under. Bear Stearns blew up. AIG had problems. And the entire world changed. So since then, I’ve had to basically network, and talk to whoever will talk to me. And keep bringing in capital. And it’s been all from different folks. So there’s no… It would be nice to have one, you know, guy who writes the check. But it hasn’t worked out that way. It’s been multiple people, and it’s been me, you know, pounding on their table, explaining why they should use the “F” word.

Andrew: [Laughs]

Interviewee: Why forums are valid, and relevant, and will make them money.

Andrew: All right. Let me try this. Timothy Sykes was on here. He is a blogger and trader, who’s just non-stop checking his name on the internet. I’m going to ask somebody in the audience, not the live audience, but someone in the recorded audience, to put a comment in with Timothy Sykes’ name, and a request to find out anything, or what his opinion is, about CrowdGather, the stock and the company. And let’s see if he checks the comments, as soon as he gets some kind of alert about his name. And let’s see his feedback on the business, too. That should be interesting. My sense is that he won’t respond if it’s just in the transcript. Because what I’ve done now is, on the side of every page, I list all my past interviewees.

Interviewee: Hmm-hmm.

Andrew: And I’m betting that now their vanity alerts just go off non-stop, every time I post, because now they’re on every page.

Interviewee: Got it.

Andrew: But if you’re in the comments, and you add his name, I think it’ll come to him in a different way, and he might pay attention to it. All right. So what’s next for you? What’s next for the business?

Interviewee: Recently, we have experienced a little bit more awareness about our company and our mission.

Andrew: Hmm-hmm.

Interviewee: And as a result, we think that it’ll be a little bit easier to procure the financing that we need to keep driving our growth. Right? And for us, the day job is very simple. You know, we’ve got a bunch of forums. We’ve got to keep them good. We’ve got to buy other ones. And it’s really, I think 2010, our target is to raise enough capital to take us from about 10 to 12 million monthly page views, and 2 million uniques…

Andrew: Hmm-hmm.

Interviewee: to probably closer to 60, 70 million monthly page views, and about 7 million uniques.

Andrew: OK.

Interviewee: Right? That’s our target. Of course, we can’t do it unless we can raise the capital to acquire them. But the recent liquidity and attention to the stock, and you know, for some reason, this increased coverage that we’re getting on sites, such as yours, at least has got people talking to us, which is a lot better than when I had to call them. Right? So,

Andrew: Oh, cool.

Interviewee: we think it’s going to be a good year.

Andrew: All right. Let me see if there are any questions. I was going to end it there. But I want to see if people in the audience have any questions. Soros is asking for an example. He likes the Zune example, but… “Like his Zune example, but it didn’t hold up.” I don’t know what you mean by that? I thought the Zune example was a dead-on example.

Interviewee: I think it might be I had mentioned that if you go to Google and type in the word Zune, you will see ZuneBoards on page one of Google. Right?

Andrew: I see. And he’s not seeing that apparently. Or maybe he is, and he thought you meant first for Google.

Interviewee: It’s closer to the bottom, but again, the site is a Microsoft site. It’s called ZuneBoards. It’s a community for fans of an MP3 player. The fact that it would rank at all in the first couple of pages for the four-letter brand name, is just a testament to the SEO value of these communities.

Andrew: Absolutely.

Interviewee: With the respect that Google gives them, because they serve up answers, they’re the answer desk of the internet, right? As you said, when you got an issue, you know, tech support, or go online and hopefully get an answer, you may have to look at a very ugly page. You may think that the software is a little outdated. But, you see words there that are relevant to your experience, and they save you …

Interviewee: …tech support or go online and hopefully get an answer. You may have to look at a very ugly page, you may think that the software is a little outdated but you see words there that are relevant to your experience and they save you a lot of time if you are willing to go trough all the other stuff.

Andrew: Christen Winkler checked it out and she saw that its in spot 4 in the Google search results. Alright, It’ll go up, It’ll go down but its placed there.

Alright, well thank you, thank you for coming on mixer gee, thank you for being so open. Where can people connect to you if they wanna talk to you directly or if they wanna say thank you.

Interviewee: Sure, my e-mail address is Sanjay at

Andrew: You are giving your e-mail address, I am so amazed when people do that. Sorry can you give it again I think I might have stepped over you

Interviewee: I am hoping you don’t print it in the transcript because I don’t have a prompt giving it up. Are you going to put it in the transcript.

Andrew: I am going to try to remember to remove it from the transcript.

Interviewee: Just spell out the “ats”.

Andrew: OK I will. Guys if I do that catch me and I will fix it, transcriber please do not include the at symbol, only include the word at. Can you give it again and this time remember transcriber only the word, no at symbol please Sanjay at

Alright, well thank you and guys I am always looking for feedback from you on this interview come back to mixer G in the comments, let me know what you thought, let me know what kind of follow up interviews you’d like to see, what kind of other interviews you want to see. I am always looking for feedback from my audience.

Sanjay thank you for doing this, and by the way thank you too I’ve got to say this publicly here thank you for helping me with ether pad for my transcripts. Speaking of transcripts, I had transcripts up on ether pad. Ether pad is starting to get a little weird because I guess they are trying to close down their site. My transcribers keep trying to go in there and edit the transcripts in ether pad, the site doesn’t work they complain to me giving me all kinds of headaches, I talked about it publicly, and Sanjay came in said: I don’t know what ether pad is but I’ll have one of my guys look into it. He not only looked into it, he figured it out, he installed it I am going to find a domain name for this and start pointing away from ether pad to the site that Sanjay put together for me, thank you Sanjay thank you crowdgather thank you for doing this

Interviewee: And remember Andrew use the F word

Andrew: The F word, forms people! Thank you.

Interviewee: Thanks for having me on take care.

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