Finding a Viable Monetization Model: wefi CEO Zur Feldman (Part 1)

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8 million users and no revenue. What do you do? Find out from Zur Feldman.

Sramana Mitra: Zur, let’s start with your personal story. Where are you from? Where were you born and raised? What kind of circumstances?

Zur Feldman: I’m originally from Israel. I spent all my youth in Israel. I ended up spending 26 years in different places in the US. Through different paths, which I can later talk about, I ended up studying in New York. My first degree is in Photojournalism and Television. I then went to Los Angeles and joined UCLA. I studied Business Administration and spent a big part of my time there – nine years. I made a switch from the diplomatic core into high-tech industry in 1986. >>>

From The Seedy Underworld of Drugs and Prostitution To Entrepreneurial Success: David Sharpe’s Journey with Empower Network (Part 7)

Sramana Mitra: All right and with this model, you have generated about a $100 million in affiliate commissions so far. Of which, about 70% of that has been paid-out to your partners?

David Sharpe: Technically, 100%. Last year, we did around $63 million in product sales. All of that, less processing fees, are given out as commissions.

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From The Seedy Underworld of Drugs and Prostitution To Entrepreneurial Success: David Sharpe’s Journey with Empower Network (Part 6)

Sramana Mitra: If you’re claiming that part of your secret stuff in building this company is this 30,000 affiliate network, then I need to understand how you got to 30,000 affiliate partners in two years. I’m looking for round numbers. Let’s say you pay 90% commission to one layer of affiliate and they go and recruit their own affiliate, how much commission is that layer of affiliate getting as they recruit their own affiliate? Two, I need to understand what the compensation structure is that drives this multi-layered affiliate structure.

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From The Seedy Underworld of Drugs and Prostitution To Entrepreneurial Success: David Sharpe’s Journey with Empower Network (Part 5)

Sramana Mitra: You pay what percent as affiliate commission?

David Sharpe: It’s not quite 100% commission because we’ve got merchant, accounting , and processing fees. The commission is between 90-94% for our core product lines.

We’re doing a $12,500 event at the beginning of March. Clearly, there’s event cost for that but instead of paying a $2,000 commission, we’re paying almost a 50% commission. That allows us to pay for the event cost and also gives us a nice margin. More importantly, it’s giving our affiliates a nice commission.

Sramana Mitra: Affiliates are making most of the money and whatever balance that’s left in the pool goes into the operating cost of managing this network, what is your revenue model? Is it the monthly affiliate fees that you derive out of all this affiliate partners?

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From The Seedy Underworld of Drugs and Prostitution To Entrepreneurial Success: David Sharpe’s Journey with Empower Network (Part 4)

Sramana Mitra: What were the profiles of these people? Were they sales people?

David Sharpe: Yes. Initially, we were looking to find people who would help us go out and promote our products and services. We went after salespeople, promoters, and marketers.

Sramana Mitra: What did you tell them? What was the call to action for these 40-50 people?

David Sharpe: It was a call to action combined with a vision. I think a lot of times when an entrepreneur is launching a business, one of the biggest mistakes that they make is just saying facts. We all know that facts and telling stories don’t work. Our call to action was simply buy our products, use them, go through them so you can buy-in to what you’re actually promoting. What we did was, in combination with giving them a call to action, we also painted a vision of where we wanted to go with the company.

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From The Seedy Underworld of Drugs and Prostitution To Entrepreneurial Success: David Sharpe’s Journey with Empower Network (Part 3)

Sramana Mitra: I’m going to get into a granular line of questioning so that we can extract the real story here. When you decided that you wanted to start a company, what did you do first? I imagine you incorporated, but was there any savings? How did you put this business together?

David Sharpe: We started with very little startup funds. We basically had an idea about the company and we put our heads down and went to work. Yes, we incorporated and set up bank accounts and so on and so forth. For the first 90 days since the inception of the idea until the date that we launched that company, we were on phone calls. My business partner for this company lived in Costa Rica. We actually lived in different countries.

Sramana Mitra: Who is your business partner and how did you meet him?

David Sharpe: His name is David Wood and we were in the same industry together. He was somebody who was producing a lot of sales and results. He had been in the industry for a little bit longer than I had been. I came into the industry and started producing as well. We just noticed each other and got on the phone, made a connection, and started a conversation.

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From The Seedy Underworld of Drugs and Prostitution To Entrepreneurial Success: David Sharpe’s Journey with Empower Network (Part 2)

Sramana Mitra: How old are you now?

David Sharpe: I just turned 30 last November 17.

Sramana Mitra: How does this bridge us to your entrepreneurship? Where does your entrepreneurship begin – more of the kind of entrepreneurship that we cover? 

David Sharpe: Certainly, you guys didn’t contact me because of my entrepreneurship in the street.

Sramana Mitra: No, that’s not our specialization.

David Sharpe: Yes, there’re other people who specialize in that. When I went through a 15-month treatment program in 2008 and 2009, it was the first time that I was introduced to being with myself and being clear-minded. I immediately got a telemarketing job. When I went in to that telemarketing job, I was only looking for a job; I wasn’t looking for a career. But what I found was, I was good at talking. I was good at connecting with people. I was good at adding value on the phone. So I became the top producer in this telemarketing company. I didn’t know how to show up on time though, so I eventually lost that job.

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Thought Leaders in Mobile and Social: Sameer Patel, Senior VP and GM – Enterprise Social and Collaborative Software, SAP (Part 7)

Sramana Mitra: If you were to start a company today, what would you do in this area?

Sameer Patel: There are several network-first business models waiting to disrupt some highly transactive areas inside organizations that should never have been transaction-first.

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