Sramana: You are sitting at $35 million in revenue a year. What percentage of that money comes from affiliate relationships?
Scott Dudelson: The majority of the revenue comes from affiliate opportunities, although I do not have the exact percentage of that breakdown. We have recently brought on salespeople who are helping bring in more direct advertising.
Sramana: This is one of the more interesting businesses that I have seen in terms of monetizing on top of the affiliate business model. Do you track some of your peer groups in this space?
Scott Dudelson: I track a lot of players in the rewards space and the affiliate shopping space. Those are two areas where we feel that we have a very good presence.
Sramana: What other companies follow this model?
Scott Dudelson: There are a few, and they are all really good companies. Ebates is an affiliate shopping model, and what they do is very similar to our shop-and-earn program. ShopAtHome.com, FatWallet.com, and MyPoints.com are the other big players in this space.
Sramana: How long did it take you to reach $35 million in revenue?
Scott Dudelson: About five years.
Sramana: How much capital did you need to build the business, and what has been your capitalization strategy?
Scott Dudelson: We have never taken any outside funding. The only money we have ever taken was the initial $35,000. At this point we are very cash flow positive, and we keep reinvesting money into the business. Very early on at Prodégé we brought on some supremely talented, dedicated people. They helped us build this company from the very early days, and these are the types of people you would need to pay a couple hundred thousand dollars to get to work for you. They believed in what we were doing early on, and they really gave a lot of their heart and soul into the company to get us to the point where we are today.
Sramana: From a business point of view, it sounds like you generated revenues early on. Is that correct?
Scott Dudelson: This is the type of business that makes money from the very first user. It was always about bringing more users.
Sramana: What was your customer acquisition strategy for Swagbucks?
Scott Dudelson: For the first few years, everything we did was organic. About 70% of our traffic came from referrals. Once people started getting Amazon gift cards, they would tell their friends how they did it. Social media was big for us. We also got a lot of traction from bloggers.
Sramana: Did you seed the blog PR?
Scott Dudelson: No, it happened organically. Once we recognized that, we cultivated that community.
Sramana: How many active users do you have on the site today?
Scott Dudelson: We have one million users.
Sramana: What are the demographics of your user base?
Scott Dudelson: The demographic is pretty broad. By virtue of the amount of activities a user can participate in, we are able to attract a wide variety of people. We have great traction among women ages 25 to 40. We have a strong presence among stay-at-home moms and people who are looking to make their free time more valuable.