Ramen or Roast Beef? Jeff Schrock and Geoff Nuval on DevHub’s Rise to Profitability

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$250,000 in 2007, led by Monster Venture Partners, and followed that up with $575,000 from angel investors in the summer of 2008. By the end of the year, the company was up to 12 employees as it pushed to get its DevHub website-editing platform ready for prime time.

Then, tough times hit. “As we were running out of that capital, we were getting ready to get venture [funding], and the global financial crisis hit,” Schrock says. “We had financing options available, but they weren’t that attractive to the founders.”

So they decided to cut staff early this year—down to six full-time employees—and made a push to become cash-flow positive. It was a difficult move, but with its flagship product complete in February, the company no longer needed a big team. “They made personal sacrifices,” Schrock says. “Now they’re coming out the back end of it, and business is stronger. I’d say they’ve skipped a few meals. Now, it’s not lobster and tenderloin yet, but the ramen is pretty good. It’s ramen profitability, and they’re working their way up to pepperoni pizza.”

DevHub makes money by hosting niche websites and connecting them with big partner sites like Amazon, InfoSpace, Superpages, Priceline, and CareerBuilder. Publishers generate revenue by sending customers to those sites, and they share those revenues with DevHub. Nuval says hundreds of thousands of websites have been created on the platform, of which less than 100,000 are “really quality sites.” But the company is on its way to 900,000 unique visitors this month, maybe more, across its network of websites, which include e-commerce, real estate, music, and video sites. “The magic DevHub has created is matching up the best kind of advertisement to a very targeted community,” says Schrock.

And it seems to be paying off. July was the company’s first profitable month, and with August looking good so far, DevHub hopes to be profitable for this quarter—and beyond. “We turned the corner when we needed it,” Nuval says. He attributes the turnaround not just to cutting costs, but also to “major growth in our network.”

Much work remains, of course. In addition to signing new partnerships, extending its network of publishers, and introducing premium features for some customers (like radio stations), Nuval and his team want to create an online community of publishers who can mix and match website features and help each other get to revenue faster.

It’s still very early, and the DevHub team seems pretty focused on its long-term success. That could still mean taking venture funding down the road. “We would look for more funding for growth. If we found the right guys and the right valuation, we’d be open to it,” Nuval says.

As Schrock puts it, “It’s definitely not time to raise the ‘mission accomplished’ banner.”

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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