Sramana Mitra: Walk me through a use case such that we can understand how the workflow operates here.
Reed Berglund: I’ll walk you through a program that we just did for Universal Music Group. This is a franchise that is about 25 years old. Its success came during the CD era, which was much different than the digital era of music. It’s a lot easier to sell a playlist. There are 53 albums in it and they continue to have some degree of success. They realized that they needed to cater to a consumer who was online and on Twitter and looking for downloads. Their challenge was to get people to download the album. They came to pop music fans on Vine and sourced those through our search engine. The influencers submit a video to be approved by Universal Music. It’s like Tinder. If you like the video, swipe left. If you don’t, swipe right. You then post the videos that you approved.
Sramana Mitra: The influencer posts the video that you approved?
Reed Berglund: That is correct.
Sramana Mitra: What is the compensation model? What is the influencer getting? What are you getting? What is Universal paying in this scenario?
Reed Berglund: Our compensation is a basic transaction fee. The influencers get paid based on their reach and their engagement. If they have a million followers with an engagement rate of 8%, then the compensation is directly related to that figure.
Sramana Mitra: How do you measure engagement?
Reed Berglund: Shares, likes, and comments divided by the total reach.
Sramana Mitra: These are original videos of the influencers?
Reed Berglund: Correct.
Sramana Mitra: This is what you decided in June 2014?
Reed Berglund: 2013.
Sramana Mitra: How did you get the company off the ground? Is it a bootstrapped company? Did you raise money? How did you get going?
Reed Berglund: We completely bootstrapped this. Our friends and family gave us $120,000 and the rest was through generating sales with advertisers as an agency. We needed to learn how to do all of these steps really well and then identify the steps that could be automated.
Sramana Mitra: Who was your first client?
Reed Berglund: McDonalds Happy Meal.
Sramana Mitra: How did you find them? Did you know them before?
Reed Berglund: This was based on years of being in the media world. We knew them before.
Sramana Mitra: So you went to them and explained to them the concept and basically put together a campaign manually using the process that you described to me?
Reed Berglund: Yes, a similar process. That’s not the most updated process that we have now.