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Hey everyone, this is Andrew Warner, founder of mixergy.com, home of the ambitious upstart and by the way, in my home here, or I’m at the office, I’m still a little bit on an angle here, Anu, because the light went out over here and I don’t know how to say in Spanish, guys, please fix the light. So, I think I might have told them please fix the door and maybe someone is going to come over and fix the door later but at some point, I’ll figure out how to explain to them to turn the light on. Until then, I’ve got to angle towards the single light that is working. How unprofessional. Let’s get into the interview itself. I have got one of the biggest, most impressive entrepreneurs in the internet space. Her name is Anu Shukla, she is the founder of three companies, Rubric, Mybuys, oh, and this one is big right now, Offerpal. Offerpal is virtual currents — is a virtual currency monetization platform, it has 200 million registered users, I don’t even think, Anu, that that even is a good number to show people how big the business is. Why don’t we start with you maybe telling people how Offerpal is used and then we can talk about how big it is and then we’ll spend a lot of time talking about how you built that and the other businesses. So, give us a better sense beyond the virtual currency monetization platform phrase that I use of what Offerpal does.
Interviewee: Offerpal actually allows consumers to take advertising offers and earn virtual currency in their favorite game or virtual world or even in other, you know, shopping kind of environments and mobile now. So, it’s a way for consumers to keep playing and earning their gains while taking appropriate and interesting and relevant advertising offers. Offerpal also offers micro-transaction cash payments, we aggregate a lot of different cash payment methods, so, if somebody doesn’t want to take an advertising offer, we have a means for them to pay anyway. So, that’s in a nutshell, that’s what Offerpal does.
Andrew: You know, I was going to ask this later, but I’ve got to ask it now. What percentage the business is in offers and what percent is in people who are pulling out their credit cards or using PayPal or some other way paying with money.
Interviewee: So, you know, that tends to change on a monthly basis depending on the type of publisher and application, that’s being used. So, in some applications, close to 70 percent are cash payments, and in some applications, close to 70, 80 percent are offers. So, I would have to say, it really varies, depending on the publisher mix that is live on the platform.
Andrew: What about overall? Can you give us a percentage or a breakdown overall?
Interviewee: You know, I don’t really have the latest overall, but that, you know, I wouldn’t be wrong if you said it was something like 70,60,40 or 70,30, somewhere in there.
Andrew: So —
Interviewee: It does tend to change a lot and I don’t have the latest number.
Andrew: But the majority is offers and somewhere between 30,40 as they say here in Latin American, ‘mas o menos’ 30,40 percent is cash.
Interviewee: Yes.
Andrew: Now, we said 200 — we said 200,000 people —
Interviewee: 200 million.
Andrew: Excuse me?
Interviewee: 200 —
Andrew: Ahh, that’s what it is. I had a typo. 200 million people have paid —
Interviewee: Yes.
Andrew: — using Offerpal one way or the other.
Interviewee: Yes.
Andrew: That’s — OK, that’s the thing. I wrote down too many zeros or not enough zeros, 200 million is a huge number when it comes to payment. There we go. Now, I get it. Now, I’m giving my audience a sense of how big Offerpal is. Let’s talk about how you got here.
5 to minute 10
Andrew: — how big Offerpal is. Let’s talk about how you got here. How did you get to be the person who’s running this business and more importantly, how can the persons listening to me right now learn and suck in as much information from you as possible so they can go off and build their successful companies and hopefully give me and you some credit when they do it. So let’s go back to where it started. Before you were an entrepreneur, you were VP marketing and product strategy, you were a COO, what were you doing there? Were you — were you leading up to a role as an entrepreneur? Were you waiting for your gig or did you just say, ‘Hey, you know what, I’m going to take whatever job make sense for me.’ How did all those past — all that past work fit into a career as an entrepreneur?
Interviewee: So, in my past career I was VP marketing and products generally for business to business software development tools. So — but generally my career track wasn’t companies in that area and I was fortunate enough to work with some great teams so that most of those companies either had NIPO or were successfully acquired and the product lines, you know, still exist and service a lot of people. But, you know, I guess the common trend here is that all of them were venture back [xx] startups. So, I really got to work in the startup environment and understood what it takes to make one successful. And eventually, I found an idea that I could be passionate about and I had worked it in our startups in the management team and seen enough successes so I was kind of emboldened by the team’s success and I started my own startup. And interestingly enough, my first startup Rubric was a marketing automation product for B2B VPs of marketing and it enabled them to manage their budgets, use the Internet to interact with their customers, do database marketing, create leads, create conversations with customers. It was really something that I had been doing all along in my job and I had learned to put together, you know, some systems to help me do my job and I thought the market was right with some incredible platform changes that were going on into client-server computing and then the advent of Java that you know, I felt that new products could be built in these new technologies, leverage the Internet and actually service people just like me because I knew they have the need, because I had [xx] myself and that’s how I started Rubric. It was really —
Andrew: This is — this is a company you started in 1997 that you sold for $366 million, right?
Interviewee: Yes, right.
Andrew: Okay. It’s not a reported 366, in actual $366 million and it’s a number that whenever I did research on you, that’s what created an awe around you, that this is a woman who is for real, started a business and sold it for more than, you know, more than most people ever get to see. So, can you give me a use case of how somebody might interact with the business? I want like a story that will help us understand what Rubric did.
Interviewee: Sure. So for example, one of our customers was — one of our first customers was Cisco Systems. And Cisco, as you know, was a great user of the Internet and sort of the backbone of the Internet. And their marketing department had a huge budget and were tasked with not increasing their team but running more campaigns, more marketing campaigns, understanding their customer better and automating their task in the marketing department so there could be an ROI tracking between the budget that they had and what they produced in terms of sales, a closed-loop system and they were looking to automate the marketing function in that company. Ironically — well it’s not that ironic but all of the rest of functions, you know the customer relationship management functions were already automated with sales force automation, customer service automation but marketing was still working [xx] spreadsheets. So, they were an ideal target for me because I had come out that sort of B2B environment. So I went to them and basically work with them for over eight months and they adopt that system widely to help manage their budgets, manage their database and create campaigns to interact with their customers, manage leads distributed to the sales force. HP for example, [xx] was my second customer. They installed us in 40 different call centers all around the world and the idea worked when did a lot of print and other types of advertising and people inquired by calling the call center how do you get that particular lead with all its, you know, descriptors, like how big of a business this is and so on and so forth to either the sales force or to a value-added reseller in the field. They wanted to automate that entire function attached to the call center and so that’s what Rubric did for them. So that was like two use cases. Another one, an Internet one was General Motor — GMAC Financing actually, and they used it to take the leads that came off the web and continue to int
eract with those customers, qualify them —
Interviewee: was qualify them and sell them loans. So it was sort of the marketing front end to the ñ to the sales piece. And those were three different [used?] cases where rubric was sold. Now the company had limited history. We were only around for nineteen months before we got acquired by a publicly traded company. So you know we really had nine months of building the product. We used thirteen point six million dollars in venture financing. And sold the company for three hundred and sixty six million. And –
Andrew: We got to dig in deeper because people keep telling me that I’m not asking enough questions about the early days. So lets talk more about the early days. You said first client was Cisco, second client was HP. How did you get those clients? Let’s start with Cisco. What did you have before you started contacting Cisco to try to sell them?
Interviewee: I had a demo, a prototype and –
Andrew: What did that prototype look like?
Interviewee: It kinda walked you through the functions of how this thing would be implemented. Showed you some cool reports that you would get. And I had a really incredible powerpoint.
Andrew: But was it a working prototype or just a ñ or it was just a list of reports and a powerpoint and a collection of what you would get at the end.
Interviewee: It was a functioning prototype. It was a functioning prototype with sound good screen markups ñ [UI?] markups.
Andrew: Ok how much money did it take you to get to that prototype?
Interviewee: Two hundred ñ two hundred fifty k.
Andrew: Ok. Two hundred to two hundred fifty k and how much time?
Interviewee: About four months.
Andrew: Four months. And how many people besides you?
Interviewee: Eleven.
Andrew: Eleven people, two hundred or so k, four months, you get that prototype. Was it enough? Was it ñ actually ok – So now you’re going in Cisco. How did you know who to talk to at Cisco?
Interviewee: Used a network. My networking contacts. So got through to a director level, a manager level person there through a friend who connected us and then got a meeting. She really liked what she saw so she connected us with the director of the group and he brought in more teams of people. Now remember this is 1997. We’re building enterprise software. We’re fully prepared for a six month sales cycle. And so that’s how we started. We actually over there started with the person we believed had the pay in. And then sold our vision to the team- the whole team and then worked with them by their requirements and tuned our products to really work for them. So we literally at this point building the product to help them according to their needs so we actually altered some product designs. And this was a real world situation and we certainly wanted our product to be used in the real world so it made sense when they said nonono that’s not how we you know distribute leads or that’s now how we query a database to come up with the right list. You know that we took their data model and their business practices and proxies and made it enrich our product. So it was a collaborative effort.
Andrew: Ok , so you said we think- we understand your pay in point. We’re coming in here we want to talk to you about how we can solve that together. You guys keep telling us what you need and we’ll solve it and show you the results and you’ll send us back and tell us how to adjust.
Interviewee: Yes.
Andrew: It was that kind of collaboration? And it was a friend of yours who introduced you?
Interviewee: Yes.
Andrew: Ok. Alright. Then HP how did you get them?
Interviewee: So one of the – at that point while we were working with Cisco and our prototype and really fleshing out the full feature set for our product ñ our initial product. We took an investment, a minority investment from [Cambridge?] Technology Partners which obviously saw some [good systems?] integration business into what we were doing and invests ñ you know made a minority investment into the company. HP was one of their big clients and so when they heard about this project, that the call center was looking to do. They said we might have the right kind of marketing automation tool for you. It’s a company that we invested in and they introduced us to the team at HP.
Andrew: And how hard was it then to sell HP? What was that experience like?
Interviewee: All of these enterprise sales cycles whether it’s HP, Cisco or General Motors – they’re incredibly complex, usually at many levels, it takes a really long time but the payoffs really good. So what we were looking for was really people to help us really improve our products and help us decide on the feature sets. To make it usable in a real world environment. To prove that it really had the benefits that we started out espousing –
(0:15:00)
Interviewee: Öcontinuous relationship marketing, et cetera. And then use that to go with other customers. And so, yeah, these — these cycles — cycles are extremely long, you have to sell many groups. And at the end of the day, they always, you know, after you work with them for a few months or so, they do come up with an RFP and they do read it out to other people. And so, event though you got in early there with the vision and the ideas, you still have to compete, that’s just — that’s just [xx] with the course. And you have to sell not only the business users, but also the people that are affected by the business users. So, in this case, it would be the sales force. You have to sell the IT department that is not going to break their systems and it’s secure and it’s scalable, and IT can indeed maintain it. And then you have to work with the purchasing department that they want to make sure that they’re getting the best price. And that the [xx] that they’re dealing with is going to be around for a long time. In 1997, I think the environment was very much of giving start-ups a chance for new ideas. The internet was, you know, coming out of [xx], people wanted, it was cool to have — and — and it was cool to do marketing in the internet. So we had sort of a lot of trends working for us.
Andrew: And, a couple of people, Pedro and Brandon, and I think there was one other person in the chat room who were asking me to ask you, how you got the initial quarter million dollars you’re saying?
Interviewee: So, actually I take it back. We, actually spent, I think under $200,000.00 for that prototype —
Andrew: Um-hmm.
Interviewee: — and it was really our own money. So I had a few co-founders and one of their fathers wrote us a check and, my — I’m — I wrote a check. I had been fortunate that I had, you know, six exits at that point, both IPOs and — and acquisitions, yeah, six or seven, I forget. And so I was able to write a check for that amount as well.
Andrew: Six —
Interviewee: [xx] in more but [xx].
Andrew: Six or seven companies that you worked for as employee, not a co-founder, you —
Interviewee: As an executive.
Andrew: As an executive, had exits?
Interviewee: Yes.
Andrew: Wow! How did you end up getting so many exits?
Interviewee: I was very fortunate to work with really great teams. I was always the VP of marketing or — or products, or both. And, I just — I was fortunate to work with great teams that made it happen.
Andrew: Did you go in there saying these guys are — are bound — exit bound, these guys are going to — to flip, these guys are going to sell? Did you go in there knowing that that’s what was going to happen?
Interviewee: No, I went in there looking at the kind of need that they were addressing the marketplace, was that really a big need? Was it a big pinpoint? I looked at the management team and my ability to work with them, and respect them. I looked at the bankers, you know, they’re going to be have enough money and is the backing solid, so they will have more money if they needed in the future. And, those are the things I looked at and — and they worked out, you know, pretty well.
Andrew: Wow! All right. OK, so, you sell for 366 million after 19 months, what was the revenue at the time?
Interviewee: The revenue at that time was about ten million.
Andrew: Wow! So, 19 months you got to ten million?
Interviewee: Yeah, it took us nine months to built the product —
Andrew: Um-hmm.
Interviewee: — completely. And, we had about a year in the marketplace, so we secured about 25customers and about ten or $12,000, 000.00 roughly. And this is enterprise license sale so, it’s pretty good solid continuing revenue stream.
Andrew: Wow! How are you getting them? I see now you — you got Cisco, I see the friend or the — the investor who introduced you to HP. How are you building so many sales in a — in a business that has long sale cycles? How are you doing so many and so quickly?
Interviewee: So, at that point, the 25 plus was we had were a mixed between enterprise customers and dot-com customers as well. So, people that were doing, you know, student loans, you know, on — on the web and, you know, there’s all kinds of action going on. Really when you have a success that you can talk about and Cisco actually did go out and give a bunch of interviews for us saying how well this had worked out for them. Then, you know, we were suddenly pitching Juniper and, you know, all the other people in that segment. And, and — and that’s — that’s how you — how you do it, you have to be — you have to get a customer successful, you have to show the ROI and then you have to have confident people that know how to run an enterprise sales cycle. And then invest in the business and go up there.
Andrew: All right. I want to make sure I’ve got the numbers right, because before the interview I wrote down a bunch of numbers about Offerpal and apparently I wrote them down in a very off way and I — I misrepresented Offerpal, so I just want to make sure that I’ve got the numbers right. And I’m going to use the numbers from the audience here too.
From 20 to 25
Interviewee: — I’m worried maybe I’m not building this business in the right way because I’m too busy working on it and not taking enough time away. I always worry, I worry I see Crystal again is in the audience, the first person I hired at [xx] she’ll know that I went out of way to try to be happy and to notice and to stop and appreciate when we were successful and when we were bringing in millions of dollars. But at the same time, I always worried, I always worry that we’re going to piss somebody off who was going to be — who was going to be a client and disappear or that we weren’t going to be there enough or that we were going to be there too much and worry too much about irritating people. And so, maybe part of it is that I’m a worrier now. After we sold the business I went off and I decided that I was going to learn to meditate and I spend a week on a — on a silent meditation retreat. And I thought that I leaked worry and I thought that everything was OK and I realized I didn’t leak worry. Money doesn’t help me get pass worry, meditation retreats don’t — doesn’t help me, therapist don’t help me, reading ëDale Carnegie’, ëHow to Stop Worrying and Start Living’ book doesn’t help. It’s just part of who I am and I have to accept some level of it and I have to work on who I am to get rid of the worries not about the situations that I’m in.
Andrew: So, how do you motivate yourself and push forward?
Interviewee: You know, there are two things. To always help me to stand up and say, this is what I’m going to do. When I was a kid when I was starting out — when I was a kid, I said, I’m going to build a huge business. When I started [xx] I would tell everybody, all my friends this thing is going to be huge, I’m not going to be happy unless this thing is — is — is making millions of dollars back with making a $150,000.00 was laughable year. This is going to make millions and the more I put myself out there, the more I knew that if I don’t deliver on that, I mean I’m just going to be not that people are all going to laugh, people are all going to notice know that I tried and failed. I can’t face myself, so I have to do it. So it’s painful as it is to fail, it’s even more — as painful as it is to deal with the trouble, it’s even more painful to fail, I better go and — and do it. And that’s why now when there are times when I say, what am I telling everybody that I have this mission to live a legacy. Why am I telling everybody this is what I’m trying to do. It’s going to be painful if I don’t do it, and I say well, you know what it’s going to be painful if I don’t do it, so it’s helpful to — to say it. It’s helpful to put myself out there on line.
Andrew: So, what is the long-term vision on Mixergy, where do you — where do you see Mixergy going eventually?
Interviewee: I need to bring in more successful entrepreneurs, I need to do a better job of bringing out their greatness in the interviews and more importantly I need to start drawing out some of the commonalities, some of what I’m seeing in these interviews and I haven’t done that well at all. I haven’t even started that, I need to start making observations like the guys who have no funding and build the business anyway, start off by building the following and then from the following comes a business and revenues and profits. I need to start making clear observations and testing those observations like something that people have heard me say here in the past on Mixergy that I’m noticing there are three kinds of entrepreneurs and if you try to be like one when you’re really like another, you’re going to fail. And obviously there are lots of different shades, but the three that I’m noticing here are, you go the thinker the person who no matter what is going to keep building this little project, he keep building businesses, he cant focus on one at all. You got the missionary the person who can’t do anything but focus on this one. This person is going to go down burning in flames after 30-40-50- years building this — trying to build just one company and if he doesn’t see announce of revenue or a bit of progress he’s going to still be a missionary who is going to wait until the rest of the world [xx]. And then the third kind is the — the mercenary. The guy who is just going to find money wherever it is. He is the guy who is going to say and you could see it in my interviews I’ll tell — I’ll ask them, I’ll say, so you did because you wanted to change the world — wow the echo is awful here sorry guys. So I’ll say this —
Andrew: [xx] to fix it.
Interviewee: Can you try muting while I talk maybe that will help. And do you — let me see. You — you’re a Skype maybe or maybe it’s my fault do I have something running that I shouldn’t have running here, testing one, yeah it’s gone so, OK. So the — the mercenary I’ve heard people hearing my interviews I said so you created this business you wanted to change the world of online news, right and the person so, oh no I didn’t and I’ll keep leading them and saying or I used — I’ll say because you wanted to make the world the better place for communication right and the guy will go oh no that’s not what I want to do. So I finally would shut up and say, OK what did you want to do? And he’d say I wanted to make money, I didn’t have any money, I wanted to make money that person is a mercenary would do whatever it takes to build a successful business just so he can make money. And those are three different kinds of people. And if you say that in order to succeed, you have to focus on one business and do it right forever and the person that you’re saying it to is — is a thinker, you’re going to just beat the life out of who he is —
(25:00)
Interviewee: — after I joined. So, you know it was a bit of a setback that this team was you know, a start that’s going to actually go really wrong, even if they have money, a great product. It’s just the dysfunction that the management team, or lack of vision and I just thought I was — it — it was a learning experience, and you know I should probably be a little more careful to look at my fit within a — a founding team.
Andrew: OK. Let’s spend a little bit of time on My Advice, and then we will move onto to [xx]. What was the vision behind My Advice which was called Rubiconsoft at first, right?
Interviewee: Yeah. Yes. So, I took a couple of years off after the Rubic, so — and — and I, you know have to have a start up, and you know I was sitting on nine different boards and doing the little bit of investing and — and so on and so forth, but then I came across the problem that I got really passionate about and decided to jump in an indoor company called Rubiconsoft. Rubiconsoft was really around demand management. So, it was allying due to the companies, remember my old customer Cisco. Well, during the — the — the bumbo after the — the crash, Cisco actually wrote off billions of dollars of inventory that either came back, or was never released, sold or whatever their story was. So, I started to think about that problem because I am still in touch with my friends at Cisco, and they were telling me you know what happened was that we really didn’t get the demand signals until it was too late. So, we knew our customers, but we really didn’t know our customer’s customer, and that this kind of shake up was going to happen, we saw it too late, ended up writing off a bunch of — bunch of inventory and I said well, even be to be environment in manufacturing, we just keep manufacturing, how come people have such a poor idea of what the demand for their product really is, why do they build so much product. And so, I went and studied that function within the company and I found it to be somewhat attached to marketing which is really my area, but really falling in — in between sales and manufacturing, sometimes in finance, and there was this function called demand management, it’s the monthly exercise that teams of — cross functional teams go through to figure out what is the demand for the product, what should manufacturing build, you know what should sales plan to — you know what is sales saying. So, it was analytical platform, we took a bunch of demanding notes from resellers, inventory art in the field, and compared it to the you know bill of materi
als in — yeah, P-System, and came up with a demand forecasting module for these types of companies. So, I started that company, and I got funding from a very good investor and it was just one investor and myself and you know we hired the best engineering team ever, and the best sales team ever, just a small team, we kept the company small and we went out to sell a very large customer who — you know, and — and went — we went to incredibly long sales cycle with them, won the deal, but then they didn’t want to deal with us because we were start-up and we weren’t SAP. So, really what I discovered was that we had the — the whole market for enterprise software had really changed and was dominated by a few players and people were [xx]. And didn’t have the same openness to start ups that they had in their rubric days. And so, unfortunately we had been leaning mean and we had some money left over, so I decided to re-let the company. So, I took the company down to, you know literally five people, and — and then came up with the idea of My Advice. And the idea including, you know — so, the idea of My Advice was to allow customers when they are shopping to indicate their preferences, or to watch the [xx] behaviors of others and make recommendations for them. So, it was preference based alerting via email, or web based recommendations, just watching and advocate the shopping behavior. So, it’s a big — it’s a big leap from demand management, but demand forecasting, but I just though I am not going to be ready to idea, that’s clearly you know going to be long sales, really long sales that goes, limited success, lots of money, you know why don’t I deem that the company into an area which could potentially go faster and do also a different kind of platform which is software service versus enterprise software. So, we made all those changes.
Andrew: When demand — when demand management wasn’t working, how did you know it? Because we as entrepreneurs sometimes go farther than we should because we are determined to make things work and we don’t notice that the — that the idea we are working on just isn’t the right one. How did you know that that wasn’t the right idea?
Interviewee: Well, you know I knew it was the right idea, because there were other companies coming in trying to do the thing, and they were having some measure of success, but they — they — they were coming up with a different platform. So, our mode of delivery was with enterprise software.
Interviewee: And they were having some measure of success but they were coming up with a different platform. So our mode of delivery was enterprise software; so we ship people basically CDs. And software and service means it’s hosted and people can just log into it and use it. So I knew that I would have to change the platform because on-demand was the way to go. Once I was ready to change the platform the work involved I could build any application versus that one. So that made that decision easy. But how I knew it was perhaps better to pursue a different area was because we were going through these incredibly long sales cycles that even when we won we didn’t win. Because we won at every level; like scalability, features, service and the business users wanted us but IT would come in and say, ‘They’re too small. We big giant corporation of $50 billion can’t really do business with them. We have to go buy our software from SAP because we, IT, are not going support ten types of software here.’ So it was that battle that was going on that was beyond me to win. I couldn’t make the product any more excellent or any more useful if, at the end of the day, I couldn’t be Oracle, right? Overnight. That and the fact that I’d have to change it to this on-demand really convinced me that we should take the money we had left and try to go into a new area and give the company a better path.
Andrew: Okay. All right. And the company’s still continuing, you’re still a shareholder, you guys haven’t exited yet but the business as you’ve just laid it out is still continuing on. And people can go to MyBuys dot com and see it.
Interviewee: Yeah. They have about 175 major retail customers. I’m really proud of the team and they’re doing a great job. And it’s a great product too.
Andrew: Okay. 2006 we get to the part that everyone’s excited about. That’s when you launch Offer Pal. Offer Pal Media, right?
Interviewee: We launched Offer Pal in November of ’07 actually. And we got funding in…Let me see if I got my…yeah. We got funding in June of 07. For the company. Yeah.
Andrew: Okay. All right. So what was the original vision for Offer Pal? By the way, I got that number from your LinkedIn profile, the 06, so maybe that’s when you first started working on it?
Interviewee: Yes. Yes. That’s when I first started working on it.
Andrew: Okay. And 07 is when the product actually launched?
Interviewee: Yes.
Andrew: What was the vision before you launched for the business here?
Interviewee: So I wanted to do something in social networking so remember at Rubric I’m talking to a lot of retailers and online commerce people, shops, big brands. They kept telling me that this social networking thing was really interesting. MySpace was actually big and Facebook was big but closed at that time. Right? It was an open platform. And they just said, there’s something in this ñ and there was all kinds of social networks springing up. They said, ‘There’s something in this social networking thing because what are big online brands and retailers looking for? Where are the consumers spending their time?’ And they said, ‘Well, it looks like consumers are spending a lot of time on social networks and maybe that’s something that you should look at because we’re looking at it…we’re quite interested and intrigued with the potential for us.’ So I looked at social networks and I saw that there was a lot of applications being built in MySpace at that time and lots of users were using them and they were really, simple, simple apps. Poke a person or publish your pictures, put glitter on your profile. That sort of thing. So I said, ‘Now because this is so viral and look how people are interconnected, let’s build an application that users can use to do something useful. Like raise money for their favourite charity or raise money for a personal cause, which might be I need new tires for my car. So we looked at it and I said, ‘It seems to be a younger crowd here. And mostly Gen-Xers and they’re all probably coming out of college or they’re musicians or whatever and here’s a way they can create a cool little poster, we called it a widget at that time, and they can attach these CPA offers that we’ll serve up and people can take these offers on Offer Pal credits. And then they can use the credits to get to either donate those credits to a charitable cause or actually cash it out for themselves or get a product they want. So they could play for an electroni
c item or music or anything like that.
Interviewee: But the whole idea was that a person could personalize this message, add all kinds of flash and other super effects on it and then a button would appear that said ‘Help Me Out’. And they would put in on their profile on MySpace, people would click on it and an offers page would come up which would allow them to earn Offer Pal virtual currency which could then be used in that way. That was the idea, okay? So from 2006 onwards we started thinking about it and then late in 06 we said we’re going to build this widget and we got a bunch of developers to work for us part time and build a widget. And when the widget was ready we said, ‘Okay. You know what? We’re going to have tens and millions of users are going to be needed for this thing so we need to go get some money so we can really market this.’ So we went and raised money; started around March of that year, of 07, and by May we had our money, we raised $4.6 million. We launched the widget into beta and we saw an interesting thing. People were doing these offers all day long for themselves and just for the virtual currency. It’s not even that they wanted the virtual currency for the Starbucks gift card or whatever, $25 card. They just wanted that virtual currency. So there were people who wrote to us in the beta program ñ there were 1000 people in the beta ñ saying, ‘You know, it’s become a part of my life. Every morning I get up and I go to my Offer Pal widget and I do offers, one or two offers, so I can earn that currency.’ And I said, ‘How are we going to get…’ Well they weren’t actually inviting their friends. In fact, on the widget itself they discovered other people and they started to network with them. So it wasn’t like they were going out and going to their established friend base. They were making new friends just to do offers for each other and earn virtual currency. It was sort of a gaming environment. So I said, ‘It’s going to be really, really tough. This thing is not at all
viral.’ And at the same time Facebook opened up their platform and a whole bunch of people got on Facebook, application developers. So we said, ‘For us to get enough users to engage in these activities, like trying to get them into buying into this game, why don’t we look at other people that have virtual currency and see if they would like to use a back end platform which was very well built and very robust, like a platform because we did come from an enterprise background. So there was an application called Friends for Sale and there was an application called Fluff Friends and there was a little company called Presidio Media that had a game called Texas Hold ëEm poker. And we went to all three, in different coffee shops, and said, ‘Hey, would you like to use this to make money because it pays out really well.’ So I think the first application we went live with was Fluff Friends and in a matter of a few hours we had generated about $3,000. And this seemed like, ‘Oh! If we could just get a whole lot more people to use this application then we really have a business.’ And so that’s what we did. We went on the hunt for different publishers and then as the publishers grew… and then of course we were always available for MySpace applications because that was really our first platform. And then all the different virtual worlds. Basically anybody with virtual currency, digital goods or a subscription based service we targeted. And the companies had a very good success in that marketplace.
Andrew: Okay. I’ve got to dig in and ask questions in more detail about you’ve said so far. But first let me ask, can somebody in the audience please go to Hacker News and find that guy who yesterday criticized me for not asking the right questions. I’m always looking to learn and become a better interviewer. I asked him to give me a list of questions that he wished I would ask you and I think he did. If somebody can go and maybe find that for me I will ask some of his questions. Okay, let’s dig into what you’ve said so far. You said that people weren’t even putting the widget on their MySpace page but they were themselves going in and taking offers to get virtual currency. What kind of virtual currency did you offer at the time?
Interviewee: Our own virtual currency. It was called Offer Pal Bucks.
Andrew: And then once they collected a certain number of Offer Pal Bucks they could convert them into real money or into products.
Interviewee: Mostly into products or donations.
Andrew: Products or donations. And they weren’t even converting into donations. They just wanted to have more and more of these points?
Interviewee: Yes. Yes. And then they wanted to interact with other people with posters that they saw on our site, like other cool posters and cool causes, and do offers for them and have those people do offers for them.
40 to minute 45
Interviewee: — and do offers for them and have those people to offers for them [xx].
Andrew: I see. So you sign up for [xx] for me, I’ll sign up for Auto Boss for you or whatever the offer —
Interviewee: Yes.
Andrew: — happens to be just so we can help each other out and get more points, that was it? That’s what they want to do?
Interviewee: That was it. They wanted to have points.
Andrew: OK. All right. So then you have your own points what was the — the process with Fluff Friends?
Interviewee: We met with the developer and we showed them our platform and it was an I — simple iframe integration that he could do in a few hours and test it. And so that’s what he did and went live with it in his application.
Andrew: What was — I mean what was the process for the user they were collecting points in return for getting what, for — for getting more products virtual products?
Interviewee: Oh, in Fluff Friends.
Andrew: Yeah.
Interviewee: Fluff Friends — Fluff Friends is, you know, has two [xx] money and gold I believe, I don’t exactly remember now. So they could get gold and the gold is used to trick up their pets and their habitats.
Andrew: OK. All right. I see, so they needed more coins so that they can trick out their — their pets?
Interviewee: Yes.
Andrew: OK. So, now you realized that this thing works. How do you take it out other developers and get them to implement it. And by the way, thank you Chris Overcash for sending the link over?
Interviewee: OK. Basically, the company started to go really fast and we were very few people in the company so — and — and the word of mouth on this was very good because people started to discover that, you know, that so and so developer has the assistant name and he’s making a lot of money, and so they would contact us. So I would say that there was a lot of inbound enquiries into offer how — what can I do to innovate it and how much money will I make? So it was all a question of making a self service easy to use on board platform and you didn’t has a platform so that developers good get the kind of matrix that they needed, they could test virtual currency exchange ratios, they could try different payment methods, and you know, all of that stuff so we just focused on in the platform robust and provide a lot of easy use self service features for publishers to on board themselves.
Andrew: So you didn’t have to go out there and educate people on virtual currency you didn’t have tell again developers how it worked or — or did you have to do a little bit of that?
Interviewee: No, I would have to say we did a little bit of that but they were kind of learning from each other. And yes, we had very specialize help for them, like, you know — you know, these are types of offers that we work for this genre of application. This is a kind of test you should run if you [xx] what the currency exchange ratio should be, this is your, you know, self service console to select the offers you want to run and not run, and this is a kind of money that you can expect, and here is other ways to promote virtual currency with the new environment, let’s analyze your application —
Andrew: Like, what — what was the good way to promote?
Interviewee: Well, basically, you know, the more people that you drove to our offers page the better, you know, they biding on the semi conversion rates the more money you would make. So how can you promote sort of have a limited items that are limited in nature? So, there’s only a 100 of these and in order to get it you need more coins. Or there’re items that are extremely desirable for some game play. So it’s all in the game mechanics and — and — and promoting it across their application in their other places. Like if people really need the virtual currency then they’re — they’re willing to pay for it and they’re willing to take offers for it. So, you can rue in the game play by saying only if you pay for it but you can make, you know, enable the special features. So it’s really — it’s all about the game mechanics as to why people want or desire that virtual currency.
Andrew: By the way I did a pretty interview with someone at Offerpal to talk about specifically, how someone who’s creating a game can juice up the virtual currency can get more people to engage in it. And he gave me these great things but — these great ideas, but after giving the each idea, you know, what he said, well, I’m not so sure Zingo wants anyone to know that, let me check. I’m not so sure that this guy over there wants anyone to know that yet. It wasn’t — it wasn’t bad it was just interesting techniques that I guess all these guys want to guard for themselves. I hope he at some point comes and I won’t even mention his name I hope he at some point comes and doesn’t interview I would do a second interview just on that with him. Were there any other iterations before you discovered the Facebook game makers, did you do anything else as a company, any other products?
Interviewee: No, no, this is the rigid that that the rigid for the application. I’m calling in the rigid that the application that allowed consumers to do offers or an Offerpal box and you know, get the desired item or — or donated the charity that’s the only thing —
Andrew: …Did you do anything else as a company? Any other produces?
Interviewee: No, no, just the widget, that the the widget for the application. I’m calling it the widget, the application that allowed consumers to do offers and offer (? indistinguishable) box and get the desired item of donate it to charity, that’s the only thing. We never no, we put it into Beta (?) but we never launched it because the platform to (? indistinguishable) took off, and that thing is still on the shelf. It’s fully functional by the way.
Andrew: Right.
Interviewee: I don’t think we’ll ever launch it now
Andrew: A lot of people; including Casey Allen here, are asking me to talk to you about your failures. They want to know that you’ve had some failures, that you’re human like the rest of us, and what you’ve leaned from them. I’m going to come beck to that. I’m going to go through the rest, the rest of this now. What was the first game that reached a million dollars in revenue?
Interviewee: Per month?
Andrew: Um, at all?
Interviewee: Um. Well it was one of the mob games, but I’m not going to obviously mention the (? indistinguishable). It was one of the RPGs, the mob, the mafia based RPGs.
Andrew: And how quickly did the mafia RPG games take off?
Interviewee: And they took off very fast.
Andrew: We’re talking within sixty days they were huge.
Interviewee: Ah. Four to six weeks yeah.
Andrew: Four to six weeks they hot a million dollars?
Interviewee: After installing (? indistinguishable) they probably hit it in the first month
Andrew: Wow.
Interviewee: Yeah, that’s because they had a lot of users already, right? They grew very quickly and they had the modernization (?) from day one. So yeah, they were hitting those numbers in six weeks. Yes.
Andrew: I used to be addicted to those mob games on my Iphone. As an insider do you have a sense of why of why those mob games did so well? Why did they hook so many of us?
Interviewee: Because they’re extremely engaging and social; and everybody wants to vicariously be a don. Um, so I think they were just a lot of fun and involved your friends and classmates. It’s just an entertainment, entertaining pass time.
Andrew: Alright, a lot of these guys have gotten more and more sophisticated about how they get us more engaged, and how they get our friends more engaged, and how they get us to keep baiting people.
Alright, ah somebody asked earlier on if I way going to talk about that controversial period. I don’t want to get into it too much, where you offers were questioned, and, and all that’s been discussed to death. What I wonder is, how did you personally deal with that backlash, when your offers were questioned, when the integrity of the company, when your integrity was questioned, behind the scenes, what was that like for you?
Interviewee: Um, it was pretty horrible. Um, and it was horrible because I just felt that, um it was an issue that we had been dealing with fir a really long time and my impression was that Offopam (?) was always the white hat (?) player because our principles were about, and our, our our investors and everybody was all about (? indistinguishable) the board. And that’s what we really tried to do, and we really tried to do it in advance of anyone else and take a leadership position. We (? indistinguishable) for it a lot. And we did that sort of what was coming out of customer service, if consumer were really complaining about something we took it down. And I think um people don’t understand behind the scenes how strict and um uniformed (?) you know how strict Facebook was in coming out with more and more guidelines about compliance and, you know transparency to the user. So all along, we certainly were aware that there were so offers that, you know, people would switch landing pages (?), or they were not entirely clear. And, um we were trying to police them, and um also follow the platform guidelines, and then when this controversy happened, you know, it always seemed like we were the worst offender when I always thought that we were, ah, and, and my goal was to have us take the leadership position in, in, in, being the, the good guys. That was really disappointing that I ended up in a position, um, where, that, you know, where there was a question a shadow, that was cast, cast on the company, um, because of this. Our intentions were, were, exactly the opposite. But having said that I think the aftermath has been really good for consumers. So, the fact that everybody then jumper up and
then Aquafel (?) got a change to take the leadership position, and be the one with the compliance policies that are published and regulated, and even the big publishers you know, became very conscious of this issue, at the end of the day was really good for the consumer, that anything does (?) even slightly, you know, um….
Andrew: What does it mean for your business? How much, how much did your sales suffer?
Interviewee: Um, well, they certainly did, but it was ah, short lived and luckily the company reacted very quickly, and so we have the support of all the big publishers, and um, actually, are trusted more than ever. So at the end of the day I think the company came out better. Not only the the consumers, buy so did the company.
Interviewee: Well, they certainly did but it was a short leave and luckily the company reacted very quickly and so, we have the support of all the big publishers and actually I trusted more than ever. So at the end of the day, I think the company actually came out better, not only did the consumers, but so did the company.
Andrew: Better because of what? What did you guys do that was different so quickly?
Interviewee: Well, we — we put a lot of effort into policing the types of offers we dropped, a lot of, you know, some of the offers or we made them change their — their landing pages and their advertising to be compliant with the platform, and we put a lot of effort and attention on it right away. And we also then went out brought in all types of new offers that, you know, didn’t have sort of some of those mobile subscription, you know, problems and, you know, what ñ we’re able to open up a whole new category of video and Mechanical Turks for example, and all of that, which was always in the works. But, you know, this kind of movement actually helped us to do it more — we — in a much better dialog with our publishers and — and the platforms as a, you know, what is — what is their — our expectation and theirs, and we actually put in a lot of backend technology to kind of monitor and see that this kind of things didn’t sneak back in.
Andrew: From the time that the story broke to the time that you guys recovered your revenue back to where it was when the story broke, how long, we are taking four weeks, four months?
Interviewee: I will say that it was less than — it was less than four months and —
Andrew: In less than four months, revenues were right back where they were and then back up?
Interviewee: Yes.
Andrew: Wow, OK. Let’s see. So — so the issue where I was trying to bounce their questions with mine, so the issue was that there were some — there was a different standard back then and everybody was — was playing by that standard. You guys were probably –you’re saying better than — than every — than most people in the industry, but when —
Interviewee: Yes.
Andrew: — when everyone was painted wit the same brush and you looked bad and you looked worst in everybody else because you were bigger than everybody else, you are saying?
Interviewee: Yeah.
Andrew: Alright. What about that reaction that you gave Michael Arrington when he came and he asked you a question at some conference and you said that’s bullshit, shit, whatever it was?
Interviewee: That — that seem spicy at the time but it also —
Andrew: What it — what do you think of it in retrospect?
Interviewee: Well I think in retrospect, it was a very — uh-hmm, it was very reactionary and over the emotion, and I really shouldn’t have. Uh-hmm, you know, there was a better way to answer that but I — at that moment, I felt attacked, and what I said obviously was not the best way to deliver, you know, the responses that I did.
Andrew: OK, in the future, if this happens to K C Allen, I think, it’s one in the audience who says what happens if this — if something like this happens to him, how would you advise him to react?
Interviewee: Uh-hmm, not exactly happens to him whenever he is talking.
Andrew: If somebody starts accusing him of doing something wrong, if somebody starts accusing anyone in my audience, if somebody starts to go on a — on a attack on them, now that you have been attacked, what do you — what do you recommend, what do you advise?
Interviewee: You know, I recommend that, uh-hmm, that, you know, that they take a non-emotional response to it. No, I was passionate about my business and I really — passionate about my integrity and so I had this, you know, very overly emotional reaction when I felt I was being attacked and I think that I would definitely recommend to K C that he do not have this — the reaction that I did that obviously wasn’t at all had fault, and it made us appear bad when in fact we were good. So, you know, it was — it’s better to step back and try to dis-slap the criticism, you know, by giving, you know, data but a non-emotional response. Definitely, that’s what I would advise him.
Andrew: I see give data but not — what kind of data would you have given at the time? And then I think we will move on past this ques — this — this series of questions.
Interviewee: Well, I gave the right data, you know, in terms of what my experiences were there, but I — I would say that because it was an emotional response, it created a lot more attention and reaction than it should have really.
Andrew: I see.
Interviewee: So, I would just say you can always deny it without being emotional. That’s my analysis.
Andrew: OK, you grew sales really quickly, how did you get the team behind you to help out? How did you find the right people in that speed? I men you are dealing with people like the [xx] Gambit within — within a month ahead of millions in sales with you. You had to build your business around these guys and they weren’t the only ones, how did you do it?
Interviewee: How did I find the right team at Offerpal?
Andrew: Yeah.
Interviewee: Oh the team at Offerpal is fantastic. They are always there, and, you know, we interviewed a lot of people and if you just start by hiring out a really — a team of really good core people, then you’d be able to attract other good people. So, I mean that — that was key for us that — that the initial group that — you know, we took a lot of care in whom we hired and of course, we made mistakes and some people aren’t with us which wasn’t a good feet but through the end of it, I think, you know, we — we ended up with people who are really confident, really passionate about what they do —
(55:00)
Interviewee: — that you know we took a lot of care on whom we hired, and of course we made mistakes and some people are with us because it wasn’t a good bid, but through the end of it, I think you know we — we ended up with people really confident, really passionate about what they do, self-motivated. Nobody ever said you set up the right kind of culture, nobody ever says it’s not my job, you know they are — they are to help each other and to win and they are very much advocates of the publisher, or the consumer and they have the right principles and integrity and I think that’s kind of I am really proud of it, the family, the — the company that we built.
Andrew: Let’s get more specific, do you have an example of somebody who you hired who was good and how you are able to do it, and then maybe we will ask about one of the people who wasn’t such a good hire and what went wrong there and we don’t need to give names in either case.
Interviewee: So, obviously all the people [xx] are — are like they are all very very good. And so, I can tell you one of the big things that we had to do was to continue to build what the publishers really needed and to continue to have a good dialogue with them, it was getting, you know was it somewhat competitive environment to be able to service their needs because this is you know money that they count on, and you know their earnings are very important to them. And so, we found people that used to previously work for publishers application developers and we brought them on-board and they turned out to be just wonderful because they absolutely understood what a publisher goes through, what an application developer goes through and what’s important to them. And — and they were big advocates of the publisher which is what we wanted. So, I think that tactic of hiring instead of sales people, hiring people that had worked in that environment before worked out really really well for us. So, that — that was a great core team that they built up since then. And in terms of hiring, you know it does — it doesn’t that we hired any people that were bad, it was just that they were not a good fit for our situation. So, they didn’t have a stomach for you know the kind of the volume of — of work that would sometimes show on the [xx], or they weren’t really into sort of detail oriented, so they are just not a fit ñ good fit for the job, I wouldn’t say they were bad people at all.
Andrew: OK. I have had the founder of Gambit here [xx]. I think just before you guys sued him — no, just after you guys sued him. Why did you guys go after Gambit specifically?
Interviewee: You know, that is — is not a pending litigation, I believe it’s over.
Andrew: It’s over, yeah.
Interviewee: It’s over, so you know at that time I believe the company felt that they had some issues, some — some legal issue and they are — they are — they are legally advised to pursue that and we did and it’s — it’s over now, I mean it was all about protection of our — what we thought was intellectual property at that time.
Andrew: What was it about them that they were doing different from the other guys who were to — who were in the same business as you guys? There were lots of people in [xx] back then.
Interviewee: They were used to be a published as to use assessors.
Andrew: I see. So, they were a publisher to use your service and because you felt that they had inside information as — as a publisher, they were using it to go against you guys?
Interviewee: Yeah, I think that entire case has been printed, so anybody who was [xx], matter, but since it’s so much in the past and you know we have all moved on, I really don’t think it’s appropriate for me to comment on — on that except that in broad terms we felt — the company at that felt that the intellectual property rights have been compromised and so they decided to pursue this path, but it’s definitely was sorted out and it’s over.
Andrew: OK. How involved were you by the way in that decision?
Interviewee: I was a CEO at that time, so yes, I was very involved in that decision.
Andrew: OK. Did you ever get to meet [xx]?
Interviewee: I saw him in some shows and — and I actually spoke on panels with him. I can say that I had a one to one conversation with him and it seems that a wonderful person actually.
Andrew: Yeah. I bet — it’s a good thing. While you are suing him, you didn’t have a conversation with him, that guys are way winning people over.
Interviewee: Oh. Well, I didn’t have a conversation with him before, during, or after. But my impression on him was — was a very dynamic and interesting and — and personal and it would be fun to get to know him now.
Andrew: I was going to say I thought you love him, I thought was in — if I was in the U.S., I would make sure to introduce the two of you. How are you going to decide what to do next?
Interviewee: In terms of what?
Andrew: For — what’s the next business, how you are going to figure out what the next offer pal is, what the next — the next big hit is. And do we need a partner who is willing to fight from what I say is to join you and become a — a co-founder?
Interviewee: Well, first of all I would prefer to come [xx] myself.
Andrew: Good.
Interviewee: Because you know he have been here a long time, I have never been to go to SARS. So, I actually have — I think — I think I have beginnings of something that I think is — I am really excited and passionate about and I am pursuing it already.
Andrew: What’s that?
Interviewee: I will say a new thing, it’s so early, it’s just —
(01:00:00)
Andrew: What’s that?
Interviewee: Um-hmm, it’s a new thing, it’s so early, it’s just a gleam in my eye right now. It’s at that stage but I am very, very intrigue about a particular area and I am investigating it right now.
Andrew: OK but you can’t say anything about it?
Interviewee: I wish I could, if I knew more I would.
Andrew: OK, fine. When you come down to bonus areas over stake will talk about the partnership. I might be wanted to do 50-50, we’ll talk about over stake and all that. Actually, I got to go back and ask one more question about Offerpal fraud, I read founders at work, I read how much fraud was an issue for paypaling, how conquering it became a mission inside the company. What kind of fraud issues did you guys have at Offerpal?
Interviewee: Oh, we had fraud issues in Offerpal, I mean anybody in the virtual currency space, I think has fraud issues. Anybody in the payment space has fraud issues.
Andrew: Yes.
Interviewee: So I think what we did early on Offerpal was to really invested in building up a set of fraud infrastructure, rules and different things in our system, you know, to really combat fraud in a comprehensive way. And I am really proud to say that even, you know, as — last year we had one of the lowest fraud rates, you know, in the industry because of all of these measures that —
Andrew: What is the fraud rate? Roughly, we don’t need to know your exact –your exact percentage but what was the fraud rate when you were in Offerpal day-to-day?
Interviewee: So you know in the open web [xx], the fraud rate can run as much as 30 to 40 percent, it’s the number I have heard from people in the security industry. And even, you know, even on a bad day, I think in our industry it doesn’t run more than 10 percent.
Andrew: So no more than 10 percent of the money that people are calling on you guys to pay out is fraud. How do you keep it so low?
Interviewee: Because of one of these measures — well, first of all we’re in a social networking environment where people do have their ids and so and so forth, so it’s a bit more complicated to be anonymous. And then secondly, a lot of measures were putting early on and then we have all kinds of technologies, you know, machine fingerprinting etcetera, that’s used to really combat fraud. So I would say it hasn’t ever been the [xx] proportions of 30 to 40 percent and it’s been pretty controlled and it’s below 10 percent right now.
Andrew: Can you give one specific thing that you did that combated fraud, that had a big impact on fraud?
Interviewee: Well, one of the things that we did was we started — we used a technology for machine fingerprinting that allowed us to really track, wear that particular — thing was coming from a set of rules around it to make sure that if they were too many transactions coming from one machine then it’ll slacked. So all of these alerts, whether it be the proprietary to the company and I think the fraud team, they’d great job in putting a very comprehensive infrastructure in place to alert us this sort of risk profile.
Andrew: I see, OK, alright. Let’s see I want to — I wont’ be fair with your time, maybe we can talk about this. I know somebody is going to do an interview the way I am. I know what to warn them about and I know what to encourage them to do. I know what to warn them to not go and do video from somebody’s office and start driving from office-to-office. I know how to tell them to set up their skyper to use skyper, some of the shelf system instead of requiring a download. This is a very long way of me saying that, when you do something, when you do something for a while you have experience and you can teach an X person how to avoid the mistakes and how to find the opportunities that you find. You’ve now been an entrepreneur. There are lot of younger earlier entrepreneurs who are listening, what kind of advice do you have for them, for what to stay away from and what to jump on?
Interviewee: In terms of market areas or just the whole entrepreneur —
Andrew: Just overall, any kind of meaningful advice based on your experience that you can give them.
Interviewee: Oh, OK. One of the things that, you know, I think there is a lot of things that an entrepreneur — entrepreneur, I really admired other entrepreneurs and the drive that it takes to really stick with the — you know, to come up with an idea and then stick with it and see to [xx]. So let me just boil it down — these are personal advice for an entrepreneur, right. Number one, I would advice them to, you know, really pick that co-founder very carefully because you know, this person can be, you know, really helpful and if they are strong and if they have a different opinion in you that you guys can, you know, work together, so I would say if you — and the ideal co-founder is really one not five and if you can find a partner on this, it’s a difficult journey —
Interviewee: …is really one, not five and if you can find a partner ñ it’s a difficult journey so if you can find a partner that can really be helpful to you I would advise them to do it and be very careful in that selection. The second thing I would ask them to pick…to really decide on a funding strategy pretty early on. So a lot of people say, ‘I’m going to keep bootstrapping this until I can raise VC money,’ or ‘I’m just going to bootstrap it all the way’ but then they discover they need a lot of money. So it’s really important to think upfront how much money you’re going to need and when and have a strategy because this could help you retain more of your company. If you are interested in bootstrapping, if you can, if you’re able to do it, then just come out with how much and when…do some planning and then decide what you need to show in order to go get that big tranche of capital from a venture capitalist and which venture capitalist you want to work with who’s familiar with your area and so on and so forth. So really take some time to think through how much money you really need versus saying I’m going to bootstrap it until I can get money. No. You need to have a plan on this because money is the lifeblood that will make your company succeed, depending on the type of business you’re doing. Either you’re generating cash very early or you’re getting the right type of capital at the right time with the right valuation or with the right types of control that you want over your destiny or your company. And the third thing I would say ñ and I could go on. This list is certainly not one, two and three. But that core team that you hire, the people that you hire, be careful. It’s okay to take a long time to hire but just be very, very quick to fire. This is…somebody asked you what are the mistakes I made? One of the mistakes that I made is that I’ve taken too…I hired too quick and I fired really, really after a long time or parted ways after a lon
g time. And it becomes very obvious if the person is going to fit in with the company culture and do they have the right skill set. Are they applying the right skill set? So I would say, take your time to hire because it’s really, really an expensive proposition. It takes a lot of time and energy and money to hire good people. But don’t be so committed to that decision when you see things are going wrong you should move very fast. So those are just some of the tips.
Andrew: Okay. Someone in the audience was asking, when you talked about a co-founder, how did you pick your co-founders?
Interviewee: Well, generally they were people that I had worked with already for a really long time. Or they brought in some domain expertise that I thought there was a good chemistry and combination of domain expertise that was important to the company.
Andrew: All right. Well, we went way over already. I’m grateful to you for all this time. Any last words? Any bit of advice? Any parting words? That’s the worst question ever…yes but apparently you’ve got something. Thank you!
Interviewee: Well, just because I feel obliged to give last words. I would say that I’ve discovered an interesting thing in this environment which is that I’m really excited about the Web 2.0 models and social networks and virtual currency. But I’ve also discovered from really the application developers that we work with, that it’s not…you can build a business with less money. You don’t have to have a plan to raise 20 million or 15 million from day one to make your company successes. There are a lot of business models where you can actually build a successful company or delay raising money until you are much, much further ahead. I’ve always raised money on a business plan. Literally. Never had a…Maybe a prototype, maybe four or five people but I’m really kind of intrigued and interested in watching myself how people have done this and gotten it further ahead to revenue generation even before they raise money. And so…
Andrew: Do you have an example?
Interviewee: Offer Pal.
Andrew: I see. How long did Offer Pal wait. I know you guys raised $19.6 million. How long did you guys wait and where were you before you started raising?
Interviewee: Well Offer Pal was raising on a business plan and a prototype, the widget, and we raised $4.6 million but I’m saying the company was profitable in three months. So we didn’t have to raise it.
Andrew: I see. All right. Well thank you. Thanks for coming on and doing this interview. I’ll see you here in Buenos Aries. I’ll draw up the partnership paperwork. Maybe we can see somebody at Fenwick who’s listening to us, can get us started. But in all seriousness, where can people now connect with you?
Interviewee: They can email me at Anu dot Shukla at Offer Pal dot com.
Andrew: All right. Well, thank you. Thanks for doing this interview. Thank you guys for watching. I’ll see you in the comments.
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[This interview was suggested by Mixergy’s incredible producer Giang Biscan.]
