Tuesday, February 16, 2010
Interview with Noah Auerhahn, Extrabux
For this morning's interview, we talked with Noah Auerhahn, President of San Diego-based Extrabux (www.extrabux.com), an online site focused on providing consumers with comparison shopping combined with discount offers. We talked with Noah about how the company grew out of a business plan competition at the University of Southern California, his recent funding from the Maverick Angels, as well as how the firm hopes to stand out among a crowded list of comparison shopping sites.
Noah, thanks for the interview. For people who haven't heard of ExtraBux, what is the site all about?
Noah Auerhahn: ExtraBux helps consumers get the lowest prices online, by integrating online discounts into a comparison shopping engine.
How did the company start?
Noah Auerhahn: We got started right out of USC. The site started as a concept that Jeff Nobbs, my co-founder, and myself developed while we were operating a cash-back and coupon website while we were attending USC. We wrote up a business plan, and won a USC business plan competition, which allowed us to get funding from the University and raise venture capital we needed to begin development on the plan. At that point, we realized we needed more money to get things to market, and that's when we went out and raised a round from the Maverick Angels.
What's the story behind the idea--where did it come from, and how did you decide to present it at the business plan competition?
Noah Auerhahn: We just had too much free time at USC. Jeff's father is an entrepreneur, and I wanted to go down the entrepreneurial path, so we had this early concept for a cash back and coupon web site. We identified a problem, after building a small user base with that site, which was that about 70 percent of people were first going to a comparison shopping site, then coming to ExtraBux for the coupons and cash back. We did some calculations, and figured out where we could make it way more efficient by combining the two. That's where the original concept came from--so we wrote up the plan, and it won the competition. We figured--if people thought the idea was good enough to win the competition, it was probably something we should pursue. So, we decided to go out and do it. We then went out to raise money, and got started on development.
Did you have any prior background in this, and what were you two studying?
Noah Auerhahn: Neither of us are developers, though we are both tech savvy. We might have gone down the engineering and business path, had we not taken the entrepreneurship path. Once we got involved with ExtraBux, we were set down the entrepreneurship path. USC has a fantastic program, in that you are able to be in class, and both learn the concepts and apply it to business. We got everything you could get which is an advantage of grad school in that undergrad program--which is to go out and practice what you're learning, learn a bit more, and then apply that theory every day. It was very advantageous to us. ExtraBux came straight out of our freshman year.
How long has the site been running now, and how's that going?
Noah Auerhahn: We launched at the end of October, went through a beta, cleaned it all up, and we had a strong November and December. We think we've really gotten the product validated by the market, particularly with Cyber Monday. We had Good Morning America do a segment on how to save online, and that ExtraBux.com was the best online shopping technique to use. That was really enormous for us, and we were the number one searched-for thing on Google that morning. People in the blogosphere were writing that this product was what they were looking for, and was another point of affirmation. We really feel we've been validated, and we've gotten our revenues up, and now we're just looking to take it to the next level.
You're entering a very competitive market in comparison shopping--how do you hope to keep above the crowd?
Noah Auerhahn: Our difference, is we're customer centric. If you look at all the other guys, they're all about moving traffic, buying traffic at the lowest CPC, and selling it at the highest CPC. That doesn't fit with what a consumer or retailer is looking for. Everyone is trying to get through the process of buying a product online at the best online retailer, but their business model doesn't create customers. We create customers, because consumers come to ExtraBux to find the lowest price on that new camera you want to buy, but also because consumers come to the site when they want to save 4 percent at Nordstroms, when they want to get 12% off at Shoes.com, plus see if there are any coupons. We create a customer, which other comparison shopping sites fail to do.
Finally, what are you using your recent funding round for?
Noah Auerhahn: The funding is going to enhance the product. The way we look at the business, in order to bring more customers to the site, we've got to invest in marketing, acquiring customers, improving the experience, improving the comparison shopping and search algorithms, and our other tools, to make the shopping process more personalized and easier for them to go through.
Thanks!