Investopedia... the ultimate investment?

The Gateway tracked down the vice president of Investopedia, Shauna Carther, to find out more about the business
Commercial awareness
Business analysis

We've all resorted to Investopedia when we haven't understood a financial term, but where did this resource come from and how is it updated today? The Gateway tracked down the vice president Shauna Carther to find out more about the business.

When and why was Investopedia set up?

It was founded in 1999 by two students (both called Cory) at the University of Alberta studying international business. They were sat together enjoying a few beers one evening, and their conversation turned to the lack of a good financial dictionary on the web. It was one of those inspirational moments - they suddenly realised that creating the best and most accessible financial dictionary on the web was something that they could, and would, do. There's the common misconception that we chose our name to be like Wikipedia, but it's not true at all - they started about two years after us in 2001!

Are there any similarities between the way Investopedia and Wikipedia operate as businesses?

The two websites have entirely different business models. However, I think theirs is an interesting strategy and the website serves its purpose very well.

Wikipedia relies on donations because of their non-advertising policy, whereas we generate more or less all our revenue from online advertising. They provide their information through user-generated content and then implement quality control through peer reviews. Investopedia is different because although our users also drive our content, by submitting ideas, we then produce the content ourselves. A lot of research and existing financial knowledge goes into that process to ensure that our content is of the highest quality and reliability. It takes anywhere between one and three business days from when a term is requested to get it up and running on the website.

How long did it take for the site to become profitable?

We managed it relatively quickly because we started to get big around the same time as the advent of Google. We were first profitable in 2001, around two years after the site was founded. I remember it well, because Cory Janssen framed the first penny he made through the website. It took pride of place on his desk until he left the company in 2009.

Why did he leave?

The Corys made the decision to sell Investopedia to Forbes Media in 2007. They stayed on with the company for a couple of years after that, but then they departed to embark on new adventures. I'm not entirely sure what they're up to now. This year, Forbes sold us to ValueClick Media - which has been a really positive thing for the business, as they're experts in online marketing. We've been able to continue to attract quality advertisers and keep our content free for users as well - which is the way we want it to stay.

How did the financial crisis affect the site?

Ironically - and we are probably one of the only companies that can say this - we actually benefitted from the financial crisis! With new terms and policies springing up everywhere, such as "credit crunch" and "sub-prime mortgage meltdown", we had a flurry of demand for new content. We also experienced a huge increase in traffic - as so many more people were suddenly taking an interest in finance because of what was going on. Some of them were trying to educate themselves about the market because of what was happening. Others wanted to know how they were going to be able to protect their investments, or recover from losses that they'd already suffered.

Who writes the term definitions and decides if they're accurate?

We have an in-house team of 14 content writers and editors, as well as an extensive network of around 200 financial experts. These are the people who are mainly responsible for writing the content.

They all have very strong financial backgrounds. Many are retired financial professionals and a significant number are active traders, but they all share a passion for educating people about finance. We categorise them according to their area of expertise, whether it's for Forex or bonds, stocks, or a combination of a few knowledge areas, and we pay them for each piece that they write. Everything goes through our in-house team for approval before it's put up on the website - which is part of my job.

Are you planning to expand into print media?

Not as a long-term plan. We do have a hard copy Investopedia dictionary out at the moment, but generally the online business model works best for us. There's challenges associated with print, because anything you publish is permanent. But you can update online articles at the click of a button - which is important for us, because we get a lot of people challenging our definitions. But having to change them quickly only works in our favour though, as it means that we're constantly on track with the latest information.

Investopedia in figures

  • 78% of users are university students
  • Investopedia lists over 12,000 financial terms
  • 35% of users work in the finance industry
  • 27% of users come from the UK

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