Bob Rosenschein, founder and CEO of GuruNet, outside the company’s Jerusalem headquarters.For Bob Rosenschein, founder and CEO of GuruNet, one of the most rewarding things is what he calls the “Wow” moment. It is the moment when he is demonstrating the company’s software to someone for the first time and they realize that they can click on any word, anywhere on their screen – whether it’s in an e-mail, a Word document, the Internet, or a PDF file – and receive an instant pop-up box full of relevant information.

This can be anything, from a definition of a word, to stock quotes, a geographical and historical narrative of a city or country, a biography, a description of a biological or natural process, or even just the translation of a word into another language.

“They just say ‘wow!’,” the 51-year-old Rosenschein told ISRAEL21c.
He turns eagerly to his screen to demonstrate. He points his cursor to the words Barbara Boxer on an Internet page, clicks ‘alt’, and up pops a full description of the senator’s education, career, interests, and even contact information in one page. One click more, and he has returned to his original page, without any interruption to his work.

In contrast, he then clicks on Google and types in the same name. There are 599,999 results. To gather the same information contained on the GuruNet page, Rosenschein will have to search the links for some five to 10 minutes, possibly quite more, and also go back and forth between the different links.

“Come on,” says Rosenschein. “Sometimes you don’t want to hunt for information through 600,000 links. You just want a quick explanation or a short profile. People today think the search engine is great, but it only gives you links to interesting Web pages and you have to do the searching yourself. GuruNet brings you the information when you need it without the pain and information overload of navigation through a search engine.

“It’s a super encyclopedia,” he continues. “It is 100 different reference sources smartly integrated into one unified source of information. Think of it as an encyclopedia on steroids.”

At present, GuruNet has information on 750,000 topics. Next month, it aims to increase that by a further 350,000 more. Though GuruNet does have translation tools available, and has queries from 150 countries, the focus today is primarily on the English language, and in the near future will remain so, says Rosenschein.

The idea behind GuruNet came from Internet veteran, Yossi Vardi, of ICQ fame. He spotted a technology that Rosenschein developed for one-click translation, and realized that with a little bit of work it could easily be adapted to become a much wider tool. He called Rosenschein and told him that he was sitting on something that could easily be turned into a killer application.

Rosenschein, who had just left Accent Software, a company he founded which developed multilingual word processing software, took the bait, and GuruNet was founded in the last days of 1998. Seed money of $250,000 came from Mort Meyerson, a Texas entrepreneur who was the former CEO of global giant EDS.
Shortly afterwards, the company held another round, raising money from a virtual who’s who of the high-tech industry. Investors included John Sculley, former CEO of Apple Computer and Pepsi Cola; Guy Kawasaki of Garage.com; Vardi; Mark Tebbe, founder and chairman of Lante Systems; and Robin Neustein, managing director of Goldman Sachs.

The company released its first version in 1999, and by 2000, the company was all the rage. In June that year, the start-up raised $28.5 million at a company valuation of $80 million. The round was led by Highland Capital Partners, joined by Flatiron Partners, Chase Capital Partners, America Online, Goldman Sachs, Robertson Stephens, and existing investors.

At the end of 2000, however, GuruNet made a mistake. With the Internet market collapsing, and the eyeball model thrown into doubt, the company decided to change its name to Atomica, and focus on the enterprise market. “It was a painful and very expensive detour,” admits Rosenschein. “In hindsight, it’s very easy to see that it was a mistake, but at the time with the NASDAQ crash going on, we thought that the only organizations with the money to pay for this service would be corporates.”

After two difficult years, Rosenschein realized that a change was vital if the company was to survive. He decided it was time to return to the consumer Internet market, and changed the company’s name back to the more user-friendly, GuruNet.

In February this year, GuruNet raised $5 million in a bridge loan in order to fund an IPO on AMEX. The IPO was finalized in October, and the company raised $12.5 million at a company value of $24.5 million, plus a further $1.1 million in over-allotment. Since then, the company’s stock price has risen from $5 a share, to $7.32 a share as of November 23rd, reflecting a market cap of $33.4 million.

Rosenschein is pleased with the outcome of the IPO, and believes that being a public company will give GuruNet an extra edge in the market. “Many companies prefer to work with a public company,” he says.

During this year, GuruNet has also made significant progress with its product offerings. The main product is a subscription-based service which can be purchased on an annual basis. In the second quarter of this year, the company also introduced a free Web-based product, which is more limited in scope. Rosenschein claims this new Web service is a breakthrough for GuruNet, and says the company intends to develop this service in the coming months.

“We are considering greater emphasis on this free version,” says Rosenschein, who adds that GuruNet is now examining potential revenue methods for the Web version, including the Yahoo and Google model of advertising through sponsored links.

GuruNet also intends to make money through partnership deals. The first came in September this year, when the company signed a deal with Seattle-based Internet book sellers, Amazon. The Internet giant has set up a sophisticated new search engine for e-commerce applications called A9.com, which was launched in September. The new A9.com site offers users search results from five information sources, including Google, the Internet Movie Database, and GuruNet, which provides users with reference information.

“It is the best of Amazon, Google, and GuruNet all rolled into one,” says Rosenschein. He notes that the deal is highly significant for GuruNet because it provides both increased traffic and increased credibility. “The fact that people will go to A9 and see the GuruNet logo means a lot to us and to our potential partners,” he says. “People who would not normally use GuruNet are now exposed to it.”

Rosenschein says that deals with other partners are close to completion.
The search engine market is growing rapidly today, as the number of Internet users rises exponentially, and the number of those connected to broadband networks also increases. “It’s a large and healthy growing market,” says Rosenschein, who believes that GuruNet compliments existing search engines.

Over the next year, GuruNet has one main task ahead – to increase its subscriber base dramatically. At present, the company has only hundreds of thousands of subscribers; it aims to dramatically raise this figure to millions of subscribers. One way to do this is through increased marketing, and another through partnership agreements like that with A9.

After several years of stagnation, GuruNet is now coming into its own. The company intends to set up a US office soon, and plans to take on more staff there.

“We’ve had our ups and downs, but things are looking very good now,” says Rosenschein. “I’m one of the most optimistic people you’ll meet. Not because I’m naïve, or haven’t been banged on the head, but because I believe there’s a lot of room to grow. People think search engines are the be all, and end all, but they are in the stone age compared to what is going to happen in the future. We are just a small part of that future.”