'My journey to a $35 million business sale'

While passion is a key ingredient for success, the truth is that business is about earning money. Here’s how CarAdvice founder Alborz Fallah went from a start-up to a $35 million sale.

A great many people go into business to follow a passion, and making money is a secondary issue. Alborz Fallah is one such business owner. However, unlike many of his peers, Alborz went on to sell a majority stake in his business to Nine Entertainment for an impressive $35 million.

His story is one of great tenacity, passion and, dare we say it, drive.

Starting young

“I guess I started my first business when I was 12. It was an online business, like a content business. I was writing about things I liked, such as bands, TV shows and things like that, and it was running ads alongside it,” recalls Alborz.

“It was earning me I think at the time 600 or 700 bucks a month, which was pretty good for a 12-year-old!”

Of course, as a minor Alborz was not legally able to operate a business or sell advertising, so he used his father as the legal entity for the business.Alborz Fallah, Car Advice

“That was … pre-2000, the dot-com boom, when things were just randomly priced,” he says.

Since that time Alborz has operated several businesses, including a computer store, a web design company and an internet cafe.

“Some of them worked really well, one of them I sold, and then I think CarAdvice is the one that really worked from a large-scale perspective. I love cars and it was the one I was passionate about.”

The winning formula

Initially a means for Alborz to test-drive an array of cars and share his thoughts with followers, CarAdvice proved to be something of a disruptive force in the automotive space, transforming the way information about vehicles was shared online.

“There was a lot of market demand at the time for what we were doing, and still is, obviously,” Alborz says. He explains that at the time, car manufacturers dominated the information about their vehicles that was available on the web.

“Although there was a lot of supply for that demand on the newspaper and magazine side, online was quite [different]. It either didn't exist or how it was presented, you couldn't find it easily. So we hit both of those pretty hard.”

From day one back in 2006, Alborz says the consumer demand for the CarAdvice offering was clear.

“We went from traffic of I think 300 or 400 in the first week to 4,500 in the second week. So it was a bit of a straggering second-week result on the site,” he says.

“It was pretty clear that our competitors didn't have a clue about SEO, and the car companies didn't really understand the web at the time, so they were letting their own keywords go, and it was very easy for us. Anything we wrote basically would go into the first page of Google, so it was very different back then, I have to say.”

“I had some great one-liners from car companies with people saying 'People who research our cars online are the ones who steal them, not the ones who buy them', and stupid stuff like that that you can't believe people actually said. They really didn't have their head screwed on, some of them, in terms of online.”

“I wouldn't work for a business that I didn't have a stake in, so I wouldn't expect anybody else to; I suppose it's as simple as that.”

Making money online

Traffic is one thing, but of course the real clincher of a business' success is its ability to derive revenue from a product or service.

For CarAdvice, targeted advertising became the answer, as its growing database became “of high value to manufacturers”. This application of user data presents a great lesson in selling (or upselling) for businesses operating in a diverse array of industries.

“The majority of our revenue comes from advertising by car companies, and when I say that, I don't mean that they pay us to review a car – they pay us to target our customers that are looking at reviews of cars,” says Alborz.

“So, for example, we really deep-dive into how we categorise our editorial and how we sell our ads, so a car company like Hyundai can come in and say 'Specifically I want to target everyone looking at … a Mazda 3 article' – one of their competitors – and then they can place their ads around that and size up that customer.”

Beating larger competitors

Alborz Fallah, Car AdviceArguably the biggest early success of CarAdvice was not identifying a niche to service, or the quality of the service delivered, but rather the ability and tenacity of Alborz and his employees to fight off the likes of publishing heavyweights News Corp Australia and Fairfax Media.

“There was a clear sense that the old media was quite afraid of the internet and didn't understand it or didn't have the resources or willingness to move quickly on it. In all reality, in the early days or even five years ago, if News or Fairfax could get their s*** together for five minutes, they could have killed our business!” says Alborz.

“They had an online presence [but] it was certainly pretty lacking and they were still very much focused on their print stuff, and the more traction we gained, the more annoyed they got.

“They obviously have a lot of power. They flexed those muscles as hard as they could to stop us getting cars or stop us going to events or try and tie us up in legal battles, even just minor things to try and make us go off track a little bit. But thankfully we just kept doing what we were doing and ultimately they really couldn't do much about it.”

Incentivising employees

One of the key factors to which Alborz attributes the success of CarAdvice is his approach to staff incentivisation: to give equity to key employees in a bid to motivate them to perform at their best.

“People always ask me do I regret giving away a reasonable amount of equity in the early days to certain people, and I really don't because without their skillsets and without what they brought, I don't think the business would have ever worked,” he says.

By allowing his key employees to have a financial stake in the business, Alborz says they focused more on the long-term viability of the business and its offering, rather than holding a short-term view.

“I know the difference between employee mentality and a shareholder mentality. People that came on early with the equity in the business are still here – all of them. I genuinely don't think employees would be,” he explains.

“I wouldn't work for a business that I didn't have a stake in, so I wouldn't expect anybody else to; I suppose it's as simple as that.”

“We made decisions quickly, whether they were right or wrong, without spending weeks or months debating.”

Sell or list the business?

Originally, Alborz says he worked on listing the business on the ASX. Yet after spending significant time and money focusing on the legal and documentary requirements for an IPO, word soon got out and potential suitors came sniffing.Alborz Fallah, Car Advice

“When the word got out that we were looking to list, we had a fair few approaches from media companies and other people in the market, and Channel Nine was one of them, and the further down the line we got, the more their offer became like a better deal than a listing,” says Alborz.

“It was a really good tie-up with a big media company that helped us grow the business.”

“The deal with Nine was pretty appealing from the aspect that we would get a massive audience boost from their network, potentially on TV, which is what we're obviously looking at doing, and across their entire network. And becoming the automotive authority for all of Nine's assets [gave] us a huge boost as well.”

So Nine Entertainment purchased a majority shareholding in CarAdvice, paying the impressive $35 million figure for what began as a hobby.

Key advice for business owners

Alborz continues to work within CarAdvice, and also counsels start-ups to share his experience and the lessons he has learnt along the way. A core component of this advice is not to wait: to be decisive and push ahead into action. Doing so will help you stay ahead of your competitors, particularly if they are bigger and more established than you are.

“We made decisions quickly, whether they were right or wrong, without spending weeks or months debating. It probably took us a day or two to make a decision and we would go with it,” Alborz says.

“Most of the time we were right. Sometimes we were wrong, but at least we were wrong quickly and we found out and then reversed course and did it the other way, rather than waiting enough time that the decision was nothing.”

Fast facts:

Business: CarAdvice
Industry: Media
Location: Brisbane
Established: 2006
Customer base: National
No. of employees: Approx. 34
Parent company: Nine Entertainment

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