Sitting in the cockpit of a brand new 2010 Chevy Camaro SS (red paint job with 6-speed manual transmission), Rob Einaudi probably has better things to do than talk to the media. But I reached Einaudi, the editor-in-chief of CarDomain.com, yesterday at the New York International Auto Show, where he was taking this particular sports car for a spin. “Everyone’s looking at us,” he said.
Everyone back in Seattle is also wondering how his local company, CarDomain, will fare in its merger with Los Angeles-based StreetFire.net. The all-stock deal was announced on Wednesday, and the combined company, called CarDomain Network, will be run by CEO Glenn Rogers from StreetFire, while CarDomain founder Alex Algard will have say about long-range strategy as its chairman. For now, the two websites and their respective teams will remain separate. CarDomain currently has a dozen employees, and StreetFire’s staff is about the same size; both teams have undergone layoffs in recent months.
“The plan is to keep basically the status quo,” said Einaudi, who has both editorial and business development duties at CarDomain. “For the first 60 days, we’ll feel things out a little. There will probably be minor adjustments and some redundancies…We’ll streamline both sites a bit.”
From a business standpoint, the deal makes a lot of sense, as CarDomain.com and StreetFire.net complement each other’s strengths. As Einaudi puts it, “It’s a perfectly natural fit. We’d started to build out video but hadn’t gotten traction. They’d started to build out a community but hadn’t gotten traction. It’s a perfect marriage.” He adds that there is no big change in business strategy planned, but now “their ad sales guys can sell across CarDomain, and our ad sales guy can sell across StreetFire.”
CarDomain also generates revenue by connecting car sellers and shoppers through its online auto marketplace, powered by Vast.com, which it rolled out last June. This is an important area to watch, as it is much closer to the point of sale for cars, so it might be more straightforward for CarDomain to capture revenue through this site. Seattle-based startup Frugal Mechanic, a product search engine for auto parts, fits this mold and got funded two months ago when it was already on the brink of cashflow break-even. (CarDomain is a partner of Frugal’s.)
But with the auto industry imploding, and consumer websites facing harsh financial realities (especially Web 2.0 community sites that depend on advertising revenue), it looks to be an uphill climb. Einaudi said he couldn’t speak for consumer Internet companies as a whole. “But in automotive, there are a lot of sites dropping like flies,” he said, citing as an example ForbesAutos.com, which shut down last November. “People are having trouble monetizing content, and keeping auto content alive.”
I’m reminded of early-stage tech investor Andy Sack’s prognostications at a financing forum last month: “There’s going to be a great washout of Web 2.0 investments. There’ll be a lot of carnage.” Indeed, for CarDomain and its former rival, banding together may be the best chance they’ve got to survive.
