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Quepasa.com's Clear Vision Fuels Astounding Growth

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Quepasa.com has found itself in a very interesting -- and enviable -- position.

Originally founded as a Web portal for Spanish speakers in 1997, the site was made over into a social network in September 2007.

That relaunch failed. But the subsequent management team has proved that the goal of successfully transitioning to a social network was a good one . . . to the tune of more than 1.6 million unique visitors per month and growing, according to the company.

The growth in traffic has put Quepasa.com at the forefront of the recent explosion in popularity of social networking sites. From MySpace to Facebook, a new generation of people are turning to the web as their primary source of meeting and connecting with new people.

Quepasa's soaring popularity has boomed without marketing, advertising, or outreach efforts, practices the company has only dipped into recently. Rather, John C. Abbott, the company's CEO, attributes the scorching popularity of Quepasa.com to good technology and his target audience's recognition that Quepasa is "an authentically Latino site."

Second Time's The Charm

Mr. Abbott was brought on as Quepasa's CEO at the end of 2007 due to his investment and M&A expertise, with extensive experience in the Latin American markets. A new CFO, Mike Matte, a man experienced with turning around public companies, was also brought on board.

"The focus was to reemphasize (Quepasa.com's) technology and develop competency around social media technology," Mr. Abbott told HispanicBusiness.com. "So we again started up as a social network, then searched for a chief technology officer."

They couldn't have found a more suitable candidate: Quepasa's CTO, Louis Bardov, is the man whose efforts on the technology side helped transform Match.com into its modern incarnation as an ubiquitously advertised, and very popular, dating site. Appropriately, Mr. Abbott praises him as "someone who really understands the concept of connecting people to other people" -- a primary focus of the new Quepasa as well.

In February 2008, Quepasa's new brain trust spearheaded the site's second attempt at a transition to a social network. This time it took. As their collective vision for the site began to coalesce, the community began to really take off. In June of 2008, Quepasa was seeing about 2,800 new signups per week. By September, that figure leaped to an astounding 110,000.

"This was 100% a function of our technology," Mr. Abbott said. "No advertising dollars, no AdWords, no banners . . . it's just a reflection of the job Louis has done in building a great technology platform."

"It's been very exciting," he said, "and we're looking forward to developing our site even further, now that we've a very strong technology platform capable of sustaining the things that we want to do next."

Eyeballs First, Money Second

The site's revenues come primarily from ads at this point, but Mr. Abbott says now that Quepasa has the sizable and growing audience, Quepasa is sorting out how best to monetize it. However, serving the audience still takes priority, he says:

"If you look at any successful site -- Google, YouTube, MySpace -- step one is to build an audience, which then allows you to build a better brand, then monetization follows. There's a bit of a tradeoff -- if you spend too much time working on how to monetize a product, you're taking resources away from building the features and products that will draw an audience."

One resource Quepasa has committed to at this point is a full-time sales VP based in Miami. Mr. Abbott also cites strong relationships with the advertising industry at the Board of Directors level through Board Member Lionel Sosa -- the man who co-founded Bromley Communications, a prominent Hispanic ad agency.

100% Dedication to Latino Audience

The company's focus remains on giving the Hispanic market a site that emphasizes tailoring entertainment through a social media experience. Mr. Abbott indicated that every aspect of the site, from its navigation to its interface to its color scheme -- is influenced by years of market research.

"When we sorted out how to design the site, a lot of it was based on the extensive focus groups that Quepasa conducted since its founding 10 years ago," he said. "So we do know that, from an online standpoint that Latino preferences, tastes, and are behavior are different."

Language is also an important aspect of the community.

"If you look through Quepasa, its user profiles, and its communities, you see people talking primarily in Spanish," Mr. Abbott said, "so of course a Spanish speaker will feel very comfortable."

There is also significant (25%) use of English by users on Quepasa, and, with a pending launch into the Brazilian market in March,, some Portuguese speakers are already in the mix. But the site's dedication to its Hispanic audience goes beyond language.

"Latino is what we live and breathe; it's not an afterthought like another organization with a 'global strategy' might have," Mr. Abbott said.

Quepasa's Other Community: Shareholders

Quepasa is distinct from other social networks in that it's publicly traded (Nasdaq: QPSA). This means that Mr. Abbott and his colleagues need to be concerned with Quepasa's community of shareholders along with its more entertainment and social-focused community. When asked if having more people to answer to complicates Quepasa's business, he indicated that it's not much of an issue--and, in fact, it's an "overall positive."

"We've been able to manage our costs associated with SEC reporting and compliance with a very, very low level," Mr. Abbott said. "More than half of our shareholder base is composed of long-term investors with whom we have strong relationships and who share our long-term view," he added.

"We're not pressured to achieve near-term goal goals, which allows us to devote resources to building our audience versus monetizing. Last year, we were allowed all the flexibility we needed to develop product without imposing near-term objectives that wouldn't be in the interest of the company in a medium- or long-term standpoint."

That the shareholders take the long view is also good from an operations point of view. According to public documents, Quepasa closed the third quarter of 2008 with an operating loss (EBITDA) of $3.49 million and, in 2007, recorded a loss of $13.54 million. The company declined to give a specific timeline regarding when it anticipates achieving positive net earnings and again emphasized that it hopes to capitalize on its growing eyeballs.

Keeping Good Company

Shareholders are undoubtedly excited by the traffic trends that Quepasa is seeing. The site has proven to be adept at developing popular, interactive communities. Some notable destinations include the Health and Beauty Channel, which is anchored by Dr. Robert Rey, a.k.a., Dr. 90210, the famous plastic surgeon and star of his own television series on E!.

Mr. Abbott also points to Quepasa's auto and car racing communities, which is a big hit with the audience, and the company's developing relationship with Playboy Latino, which will involve a participatory contest for Quepasa users.

"Our users will vote on contestants, and the winners will appear as Playmates in Playboy Mexico," Mr. Abbott informed us.

Future plans include further development of Quepasa's music communities, with more artist profiles and other music-oriented aspects of the site. Full integration with Quepasa's sister site Corazones.com, a dating site, is slated to happen by the end of the second quarter. Also in the cards is a celebrity gossip channel in English, primarily geared toward U.S. Hispanics. Mr. Abbott points out that the user experience is customized around his or her preferred language, with navigation, notices, and banners all conforming to what was selected.

While the site is currently geared toward entertainment, Mr. Abbott recognizes the potential for the business community as well. He emphasized that the site's technology has the ability to enable such features and there have been initial talks along those lines.

You Can Take It With You

Quepasa is very clear on its mobile strategy, however, and will indeed be capitalizing on the popularity of Web-enabled mobile devices among the Hispanic community.

"We will be allowing users, with a cellphone, to interact with their friends on Quepasa or update their profile update real-time, including with photos taken with the cellphone," Mr. Abbot said. He added that Quepasa is also giving users the option to receive alerts about new content or activity with their Quepasa.com communities via their mobile devices.

Clarity of Vision

In his conversation with HispanicBusiness.com, Mr. Abbott repeatedly emphasized several points -- Quepasa's dedication to the Hispanic market; Quepasa's dedication to creating and utilizing great technology; and Quepasa's dedication to getting it right, rather than rushing into decisions.

These tenets, well executed as they have been, have together translated into a rich, relevant, and enjoyable user experience that, with thousands more joining daily and more features planned, is poised to keep getting even better.



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