Sanjay Sabnani, 44, loves forums, but it’s hard to make a dollar off of them. In 2008, he launched CrowdGather Inc., a public company in Woodland Hills that manages online forums and developed technology to manage forum advertising. Since mid-2011 it has been a penny stock and currently trades in the 8 to 10 cents a share range. Earlier this month, CrowdGather announced a dramatic change in strategy with the purchase of social gaming company Plaor for $5 million in stock. Sabnani plans to merge the social gaming business with his extensive audience on the forums. Boston-based Plaor owns Mega Fame Casino, a portfolio that includes poker, slots and other games. Previous to his forum career, Sabnani worked as executive vice president of strategic development at Hythiam, now the addiction recovery subsidiary of Catasys Inc. in Los Angeles. In this interview, the Hong Kong native describes his path to the United States, his dream to become a writer and the advantages – and disadvantages – of running a tiny public company. Question: Why did you buy a game company? Answer: When you run forums, you’re basically in the hospitality business. You’re hosting people. Historically the most profitable thing you can do in hospitality is put in a casino. It’s almost guaranteed to make a profit. Social gaming has that same element. How did the deal work? We acquired Plaor for stock. It is now a wholly owned subsidiary of CrowdGather, but that’s just a meaningless corporate term. Without Plaor, I have only six employees. Plaor will be the engine that drives the company. How? All the games are free to begin with, but if you lose your chips you can buy more. It’s a very simple biz model. Instead of trying to find new ways to skin the advertising cat with forums, why not let people goof off? Are you abandoning forums? No. We will integrate the games into forums. Plaor has the games, and we have the audience. On our forums we have between 8 million and 9 million unique visitors and 93 million page views monthly. But didn’t you sell off your forums? The only forums we are exiting are the owned and operated ones, where we are responsible for content. We are keeping the hosted forums. We own these platforms, Yuku.com and freeforums.org. You can set up a community and start inviting friends to join your forum. We get traffic and sell ads, you get to have fun with friends. The forums we’ve sold off are less than 20 percent of our traffic. Which ones are you keeping? SneakerTalk is a well-known forum, but it doesn’t have the most traffic. There’s a celebrity talk forum called JJB that has a lot more. We have thousands of them. What are the risks of your new strategy? Obviously, it’s an unknown how our members will adapt. But in gaming the big challenge is user acquisition. So, we were in the hospitality business and now we have the digital equivalent of a casino license. It seems like a win-win. How did you get into this business? I owned a portfolio of forums before I started this company. My hobby was more consuming than my job, so I decided to go into forums full time. What were your favorite forums back then? The first ones were social, much like chat rooms. These were in the old bulletin board service days. With the advent of the Internet, I found forums covered topics that no one else talked about. I liked custom knives, lasers and a lot of technology forums. I basically learned technology on forums. What happened when you got into buying and managing forums? I ran into tech difficulties. I’m not a technical person, and it’s very difficult in the San Fernando Valley to compete for programmers and engineers against Google and the tech hubbub in Santa Monica. Also, the forums were costing more to acquire. Everyone thought they were Mark Zuckerberg and wanted a lot of money. It wasn’t buying these amateur little sites anymore. How come it didn’t work as a business? It’s hard to scale. There’s no synergy between a forum on fishing and scrapbooking. You can’t know about 100 different subjects. We decided those type of sites are better suited to experts. What about the business model? The challenge we had with forum advertising is it’s not always possible to make enough money. Forums don’t get the respect that we believe they deserve from advertisers. With the new model, we are going to integrate gaming. How come you launched CrowdGather as a public company? I had friends who said they would give me the first $1 million if it was a public company. Our business model was a rollup – to buy forums. And when you buy companies, you are going to give them either stock or cash. I had worked as a broker and I knew the public markets, so it was natural for me. Do you regret taking it public? It has been a mixed ride. It has given us access to capital and deals. Having public stock makes it easier to issue more. As a private company, your stock might have value, but how do you know if you can’t really sell it? Even Facebook has made most of its stock deals since going public. It has given us leverage. It has helped. How has it affected your job? Right now it’s not so fun, because we aren’t interesting to investors as a forum company. We aren’t on an exchange and no analysts are following the company. But we have 5,000 investors who are part of this family. I hope our shareholders see this is going to be a good year. Did you consider other ways to raise capital? No. VCs (venture capitalists) are the devil I don’t know, public companies are the devil I know. I have always worked at public companies. How did you get from Hong Kong to UCLA? My family got green cards in 1983, but the family business did well in Hong Kong so they decided to stay. I was 13 years old and wanted to study in U.S., so they sent me to live with my aunt in Chicago. After that I lived two years with an uncle in the Bay Area. When I went to UCLA and didn’t have to live with a relative, I was ecstatic. How did your education prepare you for this job? Basically, I’ve always wanted to be a writer. Reality didn’t allow that because I got married young, had kids young and had to get a job. My entire career has been an extension of the desire to read, write and communicate. Can you give an example? In 1999, I worked hard on my first startup. I couldn’t quit my job and work at the company, but I wrote the business plan. It was called Shopping.com, and was bought by Compaq Computer for $220 million. How much did you get? Oh, I didn’t get seven figures. My stock options were worth $250,000, and the payoff was I bought my house in Porter Ranch. But the point is I wasn’t just writing words on paper. I brought value by writing that business plan. I didn’t have to go into PR (public relations) or journalism, but I found a way to turn my skills into money. Why did you name Bill Gates as a person you admire? I like people who lead with their brain. The scholar-executive is my ideal, and there are a lot of those in the tech industry, because you are allowed to bring scientific intellectual rigor to work. It’s hard to do that with a Ph.D. in history. How do you relate to the scholar-executive? I’ve spent my career in technology and finance, even though I don’t have formal training in either. But I do things in the geekiest way I can. At my last employer (a publicly traded addiction recovery company), I was published in two medical textbooks on addiction. I don’t have any medical training, and I know experts who can’t get ink in the local newspaper, much less a textbook. How would you describe your management style? A lot of what I do reflects a creative approach to business. I’ve been described as having a slightly odd way of working. What do you do in your spare time? When you are married with three teenage daughters, you don’t have much free time. I have little windows of time during the day, and I spend it online in forums. Do you still write? Yes. Forums use a lot of words. My favorite place to write now is Quora.com. It’s a question-and-answer site, basically a forum. I have knowledge about a lot of topics and it’s nice to impart it to someone who needs it.
