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Hey, everyone. It’s Andrew Warner, founder of Mixergy.com, home of the ambitious upstart. Today, I’ve got with me, Jason Bailey, who launched Super Rewards in December of 2007. By April of the following year, he did $1 million in revenue, July 15th, 2009, he sold to Adknowledge for a reported $50 million. Jason, welcome to Mixergy.
Interviewee: Thanks for having me.
Andrew: Can you confirm that $50-million sale, by the way?
Interviewee: I absolutely can confirm nothing. This is pure rumor conjecture, I know nothing.
Andrew: Okay. I’ll leave it out there. There are a few numbers that were on in the Internet, this one seems like it was the right number, but you can’t tell unless you’re on the inside. Can you confirm or tell us what Super Rewards is?
Interviewee: Super Rewards is a virtual currency monetization platform. So, what we like to say is that we are the magic wand that gets dimes from other people’s pockets and into the magic that is the inter apps. So, we have a wide variety of ways to do that, ranging from your typical credit card PayPal payments, all through alternative payment platforms like prepaid cards or you can go into a 7-11 or a Max Milk buy, direct debit from your bank account, charge it to your mobile phone, charge it to your home phone, stick $20 on an envelope and mail it to us. If there’s a way to get a dime from somebody’s pocket, I’m on top of it.
But the most innovative and interesting way and what really kind of differentiates us from other payment platforms is our offer-based platform. So, we are able to monetize and access the pockets of people who might not have credit cards or, in fact, might not necessarily even have any money. We have ways like completing surveys, watching videos, signing up for other jobs and services, whether it be getting other insurance club or sign up for Netflix. We have about 3,000 or 4,000 different advertisers that we work with and have a wide variety of ways for people to interact with advertising, the advertiser pays us for those interactions. So, essentially, they’re buying virtual currency for these consumers on their behalf.
It makes sense, though. Did I lose you there?
Andrew: No, it absolutely makes sense, you didn’t lose me. I think where you lost me was in the pre-interview when we talked about all the different things that you did before this. So, why don’t I ask you, which of the earlier projects do you think we can get started with? I want to give people a sense of the path that you took that got you to Super Rewards, then talk about how you decided that Super Rewards was the project, what you did to shed the other projects and help this one really grow. So, of all those entrepreneurial efforts before, which one do you think we should start with?
Interviewee: I started my life as an entrepreneur, as many do very young, and believe I’m one of the ones that have been bit by some sort of virus, and I honestly can’t help myself. I’m always cooking up something, my friends and family have always just shook their head and said, “Yes, yes, yes, Jason. Sure. Sure, that’s another million-dollar idea. You go ahead and do that, let me know how it works out.” And yes, more than a few of them fell on their face.
minute 5 to minute 10
Interviewee: …And yes, more than a few of them fell on their face. But, I keep at it and keep at it and keep at it. So, I started in my entrepreneurial path in 1996 in publishing, wrote a few books, all of which made various shades of nothing, not a terribly profitable industry especially publishing over the last ten years. That’s where I discovered the worldwide Web and decided to invest a little of my time in that. Over the years, I have been involved in various startups.
Andrew: Before we go even further than that, there’s a lot of meat here for me to chew on. So, let me see. You’re a guy who is an entrepreneur from birth, it sounds like, and a teenager, as a kid before that, what kind of businesses did you launch? How did this entrepreneurial instinct expressed itself?
Interviewee: Sometimes, in high school, I was known to sell products which were not supposed to be sold in the open market.
Andrew: For example?
Interviewee: [laughs] Well, you know, I guess, my first entrepreneurial experience was probably in grade 6, selling firecrackers. But, it started out at a young age, realizing you have to pick up some of this stuff that people wanted and then sell it to those people at a considerable profit. And, hey, this is the way to make the world go round, but everybody else is working at a gas station or getting a job at a 7-11 and earning people’s lunch. Geez, this is a hell lot more profitable and more fun and more interesting, and I don’t have to get wet.
Andrew: You know, Malcolm Gladwell says that in order to get mastery or anything, you need to have 10,000 hours. What I’ve noticed in several of my interviews here is that the entrepreneurs who have mastery or confidence about entrepreneurship did get those 10,000 hours, very often starting in those early ages. How did it help you develop to sell firecrackers in the sixth grade or candy or lemonade or whatever it is that you’re selling?
Interviewee: It’s hard to kind of conceptualize 10,000 hours, but you put all the time together and I guess, I got to be pretty close to that number at this point. You know, pushing 40 and I’ve been working a lot of 60- to 80-hour weeks for a lot of years. So, it’s cumulative experience, like the Super Rewards story is a great sounding story. I’ll let you go and pitch you to the present and talk about how we went from nothing to the big acquisition in only 18 months. Frankly, it was even faster than that. I mean, we’re in negotiation with Adknowledge for a good five months before we actually close the deal. It was such a fast flowing, disorganized business, where a lot of things were at the seat of my pants. I literally had checks on my desk that were six months old because we just didn’t have time to go and cash them.
So, it sounds like a really exciting story like from nothing to something in such short amount of time, but believe me you, there’s a lot of back story there and there’s a lot of good times and bad and the lean times and strong of me going through a lot of different businesses and kind of going through to school. You can’t learn this with an MBA, you don’t pick these skills up at university. It’s learned over time from a lot of really smart people that I’ve met over the years and just getting out there and banging my head and doing everything I can to make something happen. That’s where the experience comes just a little bit at a time.
Even the Super Rewards story itself, we started KITNMedia in 2006. I left one place that I’ve been working and grabbed a couple of the best employees there and brought them with me and we started our own thing. The smartest thing we ever did was definitely worked and cajoled us to go out and do this and explore every opportunity in front of us. I had a really nice balance of really strong product guy in myself and strong marketing guy able to, like they say, so, I used to ask them the most, and then a really strong tech director who was able to literally built anything out of anything in a really short amount of time. So, it was that combination of a guy who could sell anything and a guy who could build anything, and created the product that we did.
Andrew: Let’s dig in to the publishing business…
Andrew: Let us dig into the publishing business. What was it that you were trying to publish, what kind of books?
Interviewee: The publishing company that I went was a publishing company publishing activity books for kids, not [unclear] books but local guides, so it was a book of fun things to day and places to go for kids and families around the city, and again trying to take an innovative approach. It wasn’t just a book of things to do, it also had advertising coupons and so essentially the pitch was to [unclear] anybody that would buy the book is that there is enough coupons in here, and if you use one or two of these coupons that covers the cost of the books. It was distributed through schools and community organizations to sell it as a fund raiser so they sell the book for fifteen bucks, they keep five of that, the ten goes back to me, and it is really easy stuff for them because the book, so it was a great idea, it just didn’t scale, I put a lot of time and work to publish the book, to get it out there to distribute it, and I had a help from a government program here, like an entrepreneur startup program and that kind of paid my salary while I put it together and so the book did reasonably well, and good traction but then when I went to publish the second edition of it, some quick math told me that hey I am working off hard here to make 20 grand a year and that’s not really a very good job.
Andrew: What part of it didn’t scale?
Interviewee: The outreach to advertisers. The sales force that you needed to go and land, direct [unclear] with all these small little attractions, it is the work involved in that, to close a sale that was relatively small sale, maybe 200 to 400 to 800 dollars sale, it just wasn’t worth it, and so that’s fine and dandy here in Vancouver where I could do that, but then to scale it out to Toronto, and Seattle and build it up from there and building teams in those areas and the cost involved in and the return on the books, the market available, it is a great [unclear] but I was looking for something bigger.
Andrew: We are going to talk about all these great successes in a little bit. Can you talk to me a little bit about the feeling of failure that happens when you realize that you have to close this down or that it is not going to work, especially given the fact that you were the guy who talked for a large part of his life about how you are going to have these big ideas?
Interviewee: And continue to.
Andrew: And so then what was it like after all that to suddenly see this idea isn’t working, this publishing business?
Interviewee: It is disheartening because you put a lot of time and effort and love behind it, I have still got boxes of those books in closet that I am having a hard time getting rid of in the part of my permanent ward, yeah it is a real challenge to admit defeat and say that this doesn’t work but it is on to the next, it is on to the bigger and better, part of it is shame or getting married to an ugly and being able to let go of it, but then it is also a realization that ideas are a dime and dozen and I have got lots of them and so here is the next shiny object that I am going to chase after and I still suffer from that today, buying iPad and them come out with all kinds of crazy ideas of great business models like to built around the iPad but I don’t have time to pursue them and if all of this went to the toilet tomorrow then I am sure I would cook up something else to go and pursue and so it is the fun of that. You throw shit at the wall and sometimes it sticks.
Andrew: What was the next idea after that? The shiny object that distracted you?
Interviewee: After that I went into and got involved with a start up that was doing online video aggregation, so finding online video content and bringing in all together and presenting it in, essentially creating a search engine and site for people to put videos and find every videos on the web, this was back in 2000 when broadband wasn’t as prolific as it was and so essentially it was idea that could have become what Youtube is today, but I am not saying that it was unique to us, lots of people were trying to build a Youtube back then, but it fell on its face as well, it was funded, it was under funded and ultimately fell on its face.
Andrew: What kind of funding did you have for it?
Interviewee: It got a million bucks.
Andrew: From what kind of investor?
Interviewee: A local VC from here in Vancouver.
Andrew: Okay, can you tell us about when you realized that one wasn’t going to work? Was there a moment?
Interviewee: It was a slow process.
Interviewee: It was a slow process but that was affected by the bubble. The bubble burst in whatever it was, April of 2000. And so it was a realization that we weren’t going to get more funding and that we weren’t going to turn a corner to profitability any time soon. You know back in those days everybody was talking about two, three year build outs. So, you know, we didn’t have two, three years worth of funding and, you know, the odds of us getting any at that point when the sky was falling was next to null so, you know I thought there were some strong assets there that we could have made better use of and kind-of kept alive but you know the sentiment wasn’t shared, so, and then again I had another shiny object in my face at the time that I pursued.
Andrew: Did you try to raise another round and the investors turned you down or was the landscape just looking so bad that you decided, you know–
Interviewee: It was spring of 2000, it was bleak, you know, the sky was falling and so yeah, there was, the investors that had already come in with it, you know, kind of a fall operating around them. Yeah, the numbers, the actual revenue in our books was maybe 10 grand for the month and our burn was 200 grand, like, you know, the math didn’t work out. It was pretty obvious.
Andrew: Now lets minimize this. You still hadn’t had the big hit at that point. I’ve been there, where I see a lot of my friends arising in their careers, they’re making good money if not incredible money, they’re making incredible money for that point in their lives; they’re not necessarily smarter than I am, and here I am failure, failure, shut it down, at least to the outside it must look like I’m on the wrong track. Internally there are times when I sit down, or I did at least when I started where I said maybe I’m not as smart as I thought. There is no clear evidence, there is no school paper that says A+ in business forever, there’s no evidence. How did you feel at that point?
Interviewee: Well, hungry, broke, and needed to pay the bills and then even at that same time I had, one of the things I did as the business was shutting down and there was another – lots of other local banker businesses that were also shutting down so at that point I ended up just schlepping shit on eBay. You know going, you know like literally selling computer equipment out the back door of internet startups that were shutting down while the bailout was knocking on the front door looking for his money and selling old stuff on eBay hooked up with this guy that was like doing upgrades for banks and stuff and was getting all kinds of weird old, kind-of worn out old computer equipment and selling it out on eBay and doing all right by that, but again not terribly scalable business on lifestyle business, pays the bills but kept me going. I was always doing multiple things and some of them were going ahead, some of them made enough money to pay the bills every once in awhile you’d get a good one and then started working with another local company here in Vancouver that owned a bunch of really great domain names pergon.com, boxin.com, brussin.com, rugby.com, and so started working with them and that’s how I got into SEO and just built websites to, so the next thing you know a site like boxin.com is showing up number one in Google for a search term like restaurant forms; completely unrelated but you know using the page rank of those sites and various SEO techniques back in the day when it was a lot easier to do than it is today-
Andrew: Let me come back to this. This is a company called Communicate.com – right?
Interviewee: You know the one, yep.
Andrew: Okay. So before I go on, let me just see if can understand your frame of mind. There some people who they just obsess on the things that aren’t woking. There’re other people who are almost naive in noticing it. You’re a different kind of person if I’m understanding you right. You just are constantly coming up with ideas, constantly hoping that one of those ideas is going to hit and you just can’t stop creating different businesses.
Interviewee: That’s right.
Andrew: And that’s what’s keeping you from focusing on any big negative disaster, the way a defeatist might. Because you always have these other ideas and you’re always thinking, “well I could probably tweak this and do that and one of them is probably going to work.
Interviewee: Yeah, ideas are a dime a dozen and the world changes so fast like you can’t keep up with it. Like what might have been a great idea six months ago might not be viable today. And what – and just the marketplace is changing, the competitors in the space, finding yourself a niche and if you can get some traction those are the ones you need to chase after. I don’t remember where I learned it but something that always sticks with me is just you should never, ever get married to any sort of idea you have.
Interviewee: You never ever get married to any sort of idea you have. You might feel like it’s a great idea. I mean I constantly have what I feel like are great ideas and kind of get stuck on them, you know, like I was mentioning I was just letting you know that I had coming out, and I’ve got one I might have one right now that’s kind of biting in the back of my head a little bit like wouldn’t that be a great business. Like you should probably pursue that
It’s a great business. You know you should really pursue that,you know. But then at the same time, you know, you begin to digest it through and you’ve only got so much time in a day, and there’s lots of things to do. And even with with the company itself you know. I’ve got a group of really smart people who will get together and have a session, and you can come up with a ton of great ideas and the first thing to do is to start asking them, you know? And we can’t do all of this. What is most relevant to our business, what is most likely to succeed, and let’s pursue those, and if at any point , you know something shifts then we need to be able to cut those back. Like you can’t get married to these ideas you have.
Andrew: I want to get back to that because that’s something that people in the audience have asked about. But I also want to ask… someone in the audience was saying that he thought he heard you say that you had $2000 a year coming in from a trust fund? Did i miss that? You caught that? No. Did $20,000 a year … 20,000 a year was that something –
Interviewee: Oh, that was… When I started my first business back in like 96 or 7 I had a government program that was essentially paying my salary.And it was, I think it was about 800 bucks a month to pay me to pursue my business building ideas.
Andrew: Okay so Communicate.com … sorry
Interviewee: So it was government program, you know, that would essentially pay you to build up to your business idea.
Andrew: Okay. Communicate.com from 2001 is when you started that company, “” automobile.com, boxing.com. You just said leisure.com
Andrew: So one of your board members Wertz I think is on the board right now. I think they’re a public trading company today?
Interviewee: Yes they are. They were back then as well.
Andrew: And you helped them with search engine optimization, you said helped them drive traffic. What angle- was it about advertising, or was it about selling something else?
Interviewee: Advertising has always been kind of my bet. You know, they started with the big kids book I published in the mid 90’s. Having an advertising vent in that. And so I’ve always kind of kept my fingers in that pie. In my opiniion advertising is what makes the world go round. You know that’s what makes us buy and sell all this crap I really don’t need, but… so the stuff I did with communicate was both from an advertising vent and also from a development vent. So he makes me laugh. You know those rules. These are all thing I’m comfortable with. I’m not good at it, but I’m comfortable with it to know when I’m being bullshitted. So, “” .com was the first one I dealt literally…I literally took it out of the box. Ecommerce engine and tweaked it and built it psyched myself to set up deals with distributors and and you know selling products on line, and to this day perfect.com or communicates, it is now called live current. It’s their strongest asset.
Andrew: You said that you saw an opportunity while you were working at Communicate. What was the opportunity?
Interviewee: I saw a lot of opportunities but…
Andrew: So were you then from there still running over the five or six years, I guess five years that you worked with them, were you still running different businesses on the side?
Interviewee: No, No. I… In the beginning for the first few years I was kind of like part time between those, and still running businesses on the side. Then I dumped all of those and put 110% of my efforts into Communicate.com. But it was pretty clear to me after a few years of being there, that my goals and the goals of the other leaders there weren’t in line and, you know, the plan was to start generating revenues, to build up the value of the company and to run the stock price up, and to turn it into something bigger, but it was flatlined, and I wasn’t getting the support that I needed. And that’s when, you know that I knew the best thing for me was to look outside of it again and find something better, to find something that I owned a bigger piece of and had more control over. ‘Cause I really, you know, right or wrong, felt like I built that company up, and, you know, wasn’t getting the recognition for it. So, screw it. I’m going to go do it myself and go in 100% of it. Thank you very much.
Andrew: How did you make the transition? What was it…
Interviewee: What’s the first thing I did? The first thing I did was grabbed the smartest people around me.
Interviewee: First thing I did is grabbed the smartest people around me so that I would have the technical support and vision support from people who knew what they were doing and that I knew I could work with. So I grabbed a few of the strongest employees from there and brought them with me.
Interviewer: We’re you funded?
Interviewee: No, zero.
Interviewer: So how did you lure them over there with any money and you just had an idea?
Interviewee: good sales pitch, you know like some of them were harder than others to convince. I thought this was the right move. Especially, you know one out of family and its a real risk taking to make that transition. But, you know we were already standing and getting revenues and you know we could show that and knew it was above determined it was a great idea and it was going to work.
Interviewer: So you already had a business you were just transitioning by working actually you left and then you started the business or did you start the business and then you left?
Interviewee: I started the business essentially and then left in a kind of way, but it was always just cooking in the back of your head. There were a few things coming together that had it’s small revenues, so as soon as I left I was able to put a lot of time and effort into it and turn it really really quickly and grow it fast.
Interviewer: What we’re the business’s?
Interviewee: It was all search wise and stuff affiliate marketed. So buying traffic from Google, Yahoo, and MSN and sending it through to various affiliate programs you know anything from dating. You know the S.E.O.-ing sites are getting trafficking and stuff through there. You know referrals and talking to other affiliates to get them to sign up to this affiliate network or that affiliate network beyond that. So it was a lot of small things you know. Well, this makes 50 dollars a day that makes 200 dollars a day this is making 75 dollars a day. When add them all up which is a couple grand a day which is enough to support the three of us. So lets do this and lets scale it up
Interviewer: What did you need them to help you with? Like to scale up it seems like one of those business’s that you can run on your own which you keep cranking out your own websites.
Interviewee: Well yeah but I needed there technical skills, I needed them you know, these are the type of guys that are more experienced that you know who did this because if it worked in one spot then you know you can get it out to a million spots and I didn’t have the skills to really kind of scale the technical perspective.
Interviewer: What do you mean by spots?
Interviewee: Well I mean like search campaigns and long tailed key words. With the time it takes to create ten thousand Internets you don’t want to sit there and manually create ten thousand ads you know you want to automate feeds that are writing out scripts to go to this site pulling much content down mixing the information you get from this website cross referencing those things and making and creating a bunch of sets of keywords and content and feeding that to the search engines in an automotive manner feeding it to the appetizing programs to create the ads which each may only get five clicks a month but if you have a million of them it all adds up right.
Interviewer: Could you tell me now I got a sense now of what it is, can you tell me one of the sites and just to flush out that example can you make it a little more specific can you tell me about the earlier sites?
well sure. So its something like shoe buy right?
Interviewee: Something like shoe buy, right. So its like an online shoe sale site. So what you want to do is scrape content from everywhere from the web every type of shoe, every shoe that exists mix it together and brainstorm 20 different colors and sizes and mix and match everything together to create keywords like red size seven proda whatever’s and then to mix all those combination’s of keywords together to get these long tail keywords and it adds matters so its generating sets of words that you can Google, yahoo, msn, etc. Set low bids but manage against that long tail its like we were building campaigns and sending them out to shoe buy , which we’re one of our successful ones back in the day.
So if someone where to do a search on google back than about proda theyd land on your website and see what?
Interviewer: All it would do was redirect them to a million items.
Andrew: So if someone was to do a search for red prada purse and land on your site, what would they see?
Interviewee: Well we would redirect them to the affiliate landing site, whatever closest a[proximation
Andrew: Oh , so you weren’t actually buying the site, you were buying those key words for when they were doing a search for those words and then redirecting them?
Interviewee: We were doing both actually, We were sending them to whatever the shoe buying site or the affiliate links. For things like dating sites, we were building the longer content which we would be scraping sites for content that and running all of that together. essentially creating dating profiles that would starts generating content which we would then link to sites like eharmony, etc. etc.
Andrew: Were sites crawlable back then? you could see the persons pictures and profiles?
Interviewee: Somewhat… I guess it was jut about having writers and designer that could create strong scripts. The last thing that you want to do is have to start creating a bunch of original content. It’s the same with ringtone program.
Andrew: That sounds extremely creative!
Interviewee: you can make a generic site for ringtones and start trying to get content, but we went to myspace for the top 500 bands and started scraping content, and then you would have the kind of content that could get a million views overnight. i mean when anyone searched for jessica, that’s what would come up. I mean she wasn’t around back than, but that’s what it would have been.
And creating that content and putting it all up, it may only get 5 clicks a month but it would be able to auto generate five million pages. Those five clicks add up.
Andrew: Okay- I have someone in the audience that is suggesting that this is spam.
Interviewee: Absolutely. I agree with them 100% and there is a lot of money being made on spam. amen.
Andrew: Okay, I like this! I like this sort of openness. I was afraid we weren’t going to be able to get enough information! Search optimization? I mean, were you just buying ads or was there also search engine optimization?
Interviewee: All of the above. like i say, it was a combination of a lot of small things, and burning together the skills we had. this was back in 2006 and we started our own affiliate organization and our affiliates ran traffic through that and that’s what the next step was. It was a lot of small things
Andrew: That’s kind of my next question. How much money were you bringing in from all those sites you had running in together?
Interviewee: Well, at its peak it’s best month it did about a million dollars of profit in november after we launched it in august. I think it was ’06.
Andrew: and is this the company you called kitten media?
Interviewee: That’s right.
Andrew: And Kitn media, that’s k-i-t-n media?
Interviewee: Yes- kick in the nuts. That;s what you get. [makes two quick kick in the nuts noises] that’s what you get. Kick in the nuts.
Andrew: aw i see.
Interviewee: What you get is better than a kick in the nuts.
Andrew: Oh so it is with a t like in tom?
Interviewee: Yes, yes.
Interviewee: That’s all nice and happy like kittens and bunnies but…
Andrew: Oh I see [laughs]. So what else were you pursuing around that time?
35 – 40
Interviewee: And so started building some small Facebook applications, doing things like, and back then it was all about putting things on your profile page, so we had things like putting little comic strips on your page, editing photos and cheesy little apps like that, that were just making money off of banner revenue and putting in CPA ads from around internal CPA network, and they were making $2, $5, $7 a day, and that’s when we cooked up the idea for the super rewards platform when we were going out to all these other application developers and saying hey, you should run the ads from our CPA network, here is how you should do it and that’s when we cooked up this whole idea of what if we made it so that the advertising was part of the application and for some of these little racing apps instead of where you build a car that’s racing against your friends out there and  video works, then do you want faster car or more gas or more races a day, and hey go sign up for this ring tone or whatever author and  five bucks for putting the signs up, so we will give them $5 worth of this virtual currency or give you a better car or more raciness, and so went out and I did a talk at the local Facebook developers garage talking about this platform, this idea. Everybody loved that, everybody wanted to do it and I literally over the next few days had hundreds of people coming to me calling, emailing, saying hey they really love this idea, they want to pursue it and so we held a whole bunch of people’s hands through the entire process and after about a month, probably of about 300 people that I talked to, only three of them actually came out together and were running ads and making a decent amount of money off of it. So in the meantime we built this platform internally for one of our own applications and being good old Canadian boys we built a hockey pool application such that the whole fantasy sport school where you pick your team and whichever player score the most points, you get the most points in competing with your friends. So it did not have a whole lot of users, and it wasn’t making home a lot of money, in the past off its banner ads was making $3 or $4 a day and then we implemented this system and suddenly was making $200 or $300 a day, so we thought well we are really on to something here, so and everybody else was really struggling with this, they were kind of missing the nuances of how to track things back and forth between the ad networks, geo targeting the right ads to the right people in the right countries, and all these kind of nuances that we were very professional and have done a hundred times, so we thought well let’s go, let’s take on it big and push it out into the market and see what happens. And that was December 10, 2009 and one of our first customers at that time was another local company here out in Victoria called Backstage Technologies that had a bunch of scratch and win and poll tab type applications and they were our first customer and quickly  and were making thousands of dollars a day and were really shocked and surprised and excited by, that company is still around today and now they are the ones that just published Family Feud which is in partnership with I Win and doing really, really well on the platform and going really fast. So, we created a viable business for them and they continued to pursue and find success today. So we launched in December and by Christmas we had four or five different publishers working with us, by the end of January we had about a dozen or fifteen different publishers working with us, making $10,000 a day in revenue and like I’d say just kind of floated from there and so we sold off all our other products and concentrated on this and it has been a rollercoaster ride ever since.
Andrew: And we breakdown what you talked about so far. You said, starting with the affiliate program, you said that you just launched an affiliate program, how did you do that? An affiliate program is a pretty involved process where you have to pay the affiliate websites for the traffic that they send you that coverts, you have to then collect money from the advertiser, you have to watch out for cheaters, it is a whole infrastructure in place, how did you just launched that as one of your different businesses?
Interviewee: Get off your ass and do something.
Andrew: Okay, how much did you do and how did you do it once you got off your ass?
Interviewee: Well, with that particular one what we did is we, once from a company called Drag Tracks who I highly recommend not working with, but for $6,000 a month, you pick a license.
40 – 45
Interviewee: $6,000 dollars a month, you pick up a license of those guys to use all of their tracking technology and then we started pulling in ads from other ad networks that I had relationships with and so, we weren’t doing direct relationships without so much as doing direct relationships with agencies and other networks that had lots of them, so instead of doing one hundred different one off deals you do three or four big deals where you get 8 or 10 offers from one place and bring them all together and then it is just a matter of publicizing it and going out and finding affiliates in different markets and bringing them together and feeding them into your system, so you are just marrying together the advertiser sources and the publisher sources and making them work together and getting [unclear] and we had couple of other guys I was working, a few other guys I was working with to make it all come together, it was long days and hard weeks but it was worth it.
Andrew: And the software was off the shelf software that you just bought?
Andrew: Why don’t you recommend it, what happened with it?
Interviewee: It was like a lot of off the shelf products, trying to everything to everybody and the company itself [unclear], I never had great experiences with their support, I continue to battle with those guys to this day, it is a big company that have a set of products, they are trying to be everything to everybody and in the process of doing so often forget about the little guy and throw the little guy under the bus and had complicated systems that don’t work and are buggy as hell and cause all kinds of issues, I would recommend going with a smaller something more focused on what it is. A lot of people here probably have experience with out of the box e-commerce platforms for instance, they tend to do too much and try to be everything to everybody instead of being a really effective solution of on thing and I am a much bigger fan of hand rolled solutions that knew exactly what you needed to do.
Andrew: Do you have a recommendation for a program that you would use now?
Interviewee: I would hand roll myself something now but that’s because I have to [unclear] the resources and time to build something like that out, so there is other companies out there, Ventrust is one of them, [unclear] Media has also got one, forgot what they call it, has offers is what they were originally calling it, now they are calling it something else, but they have a much stronger platform that I would recommend. TATOOMEDIA.
Andrew: Okay, so now you are just using off the shelf solution you created your own affiliate program, you started bringing in affiliates, and that was another revenue source and another business, then you started creating Facebook apps, who created the Facebook apps for you?
Interviewee: Developers that I had working for me.
Andrew: Okay, how many hours did it take you to launch one of these apps?
Interviewee: Back in those days it was the kind of thing that you sewed together on a weekend but the bar was so low on applications back then, so anywhere from a few days to a few weeks of working on any particular application to get it out to market.
Andrew: I heard Offerpal talk about how they discovered the business. I had the founder of Offerpal on here and she talked about how she started off with Myspace and how that ended up leading into a business that was very similar to Super Rewards. Who influenced whom there?
Interviewee: Well, it is always hard to pinpoint what started who, where. I could sit here and take responsibility for creating Zing and everything else but Zetterberg would still be driving a Pinto if there wasn’t for me and everything I did for the Facebook platform, but that is pretty arrogant, it is not the case. Everybody influenced everybody and everybody pushed everybody ahead. This product and my product came out of the Facebook developer [unclear] and the internal applications that we built and then we decided to push this pig out into the market and put some lipstick on it, in December, so our launch day was December 10, and it was around December 7 or 6 I believe that I ran into Offerpal for the first time and I was like oh man, looks like my great isn’t the only great idea out there, Offerpal did launch their product I believe in November or sometime, so they were a few weeks ahead of the curve, of me of doing it but there is definitely a lot of talk in the forums about this kind of product and the product that we launched in the market at that time was a very, very different thing. There it was concentrated on kind of shopping type offers, Commission Junction etc, were most of where they were going to go there,
Interviewee: There’s definetly a lot of similarities between their product and my product, and over time, especially in the first nine months it was very much a horse race of myself versus Anu on pushing the bar and pushing the bar. We’d push something out and they’d fast wall it, and then they would push something out and we’d say, that’s a great idea, we’ve got to do that too. It was a lot of both of us pushing the bar, and then the competitive nature between the two us that really accellerated the platform and created what it is today. Anu and I aren’t best friends or anything, but we definetly owe a lot to eachother. Having created this competitive environment and that strong competitive nature that we both have that created this industry, and now there’s twenty companies doing the same thing. But who was first, the chicken or the egg isn’t really relevent to the fact that we are both very strong competitors that built it into what it ultimately became.
Andrew: How did she become so big? How did Anu’s business get into the hundreds of millions of dollars and yours was tens of millions of dollars in value?
Interviewee: Where did you hear that bullshit?
Andrew: Hundreds of millions of dollars for her business?
Interviewee: Who says Anu’s business is in the hundreds of millions of dollars? Who says Anu’s business is bigger than mine? Mine’s bigger than hers.
Andrew: It is?
Interviewee: Absolutely! Well, first of all, she doesn’t work anymore.
Interviewee: Put her numbers on the table. I’d love to see her numbers. My numbers are bigger than her numbers.
Andrew: Numbers for revenue?
Andrew: Revenue, partners, transactions, everthing? Everything is bigger?
Interviewee: Everything. She loves to push out big numbers and I have to call each of them into question, and I have a much tighter pulse on what’s going on in the industry. I’m surprised that you have the reception that her’s is hundreds of millions and mine is tens of millions of dollars. Absolutely, we have always been neck and neck. Some months I’ll be slightly ahead of theirs, other months they’ll be slightly ahead of mine, but at the end of the day it’s absolutely neck and neck.
Andrew: Wow. What kind of revenues did you do when you sold?
Interviewee: When we sold, our run rate was approximately one hundred million dollars.
Andrew: one hundred million dollars. And the net margins, were they twenty percent?
Interviewee: We’re not a public company, and neither is Anu’s, so we don’t release specifics.
Andrew: Alright. Someone in the audience said that they love the expression that you use, actually, you know what. Let me come back to Gambit. Where did Gambit fit in all this? We’re they the third player at the time?
Interviewee: They definetly weren’t the third player to come into the market place.
Andrew: The top three?
Interviewee: But they were definetly in the top three. Before all the scandal stuff last fall they were definetly a strong number three and coming up fast. Noah was very aggressive with his margins, very aggressive with his marketing. A lot of people have tried to come into this market to compete with Offpow and myself, but no one had actually done it successfully. Gambit and Noah was the first one to pull it off.
Andrew: Noah’s going to come here in the next few weeks to talk openly about what happened with Gambit, and it seems their business took a big hit because of the whole scandal thing. Why didn’t they recover?
Interviewee: That’s a great question to ask Noah. I haven’t spoken to Noah in a few months so I don’t really know what the blow was. For Offpow, myself and Gambit, especially around that time, facebook was a large percentage of our revenues, and being banned from the facebook platform, essentially overnight you lose a percentage of your revenue base and then the reputation carries on outside of it as well. Being banned on facebook makes it harder to get traction in the MMO world and other places. Personally, if I was Noah I would have jumped the brand, rebranded as something new or sold the technology or something along those lines. But Noah’s a smart guy and I’m sure he’s got a good story to tell of why he hasn’t been able to recover of what he is doing to ultimately recover.
Andrew: I’m looking forward to doing that interview. He says he has a great story but he wants to hold off until he launches his next business, so we’ll wait for that.
Interviewee: Yeah, well there you go! I knew he’d be up to something and I’m sure it’s related in some way. He’s a smart guy and he’s an aggressive marketer and whatever he does, he will ultimately find that success. It might not have been this one and it may not have been that one, and Gambit will go on his stack of stories that ultimately made him a successful entrepeneur.
Interviewee: …and gambit, we’ll go on his stack of stories that ultimately made him a successful entrepreneur, but I have absolutely a hundred-and-ten percent confidence that at some point, somewhere Noah is going to find a great success.
Andrew: Yeah, me too. Michael Rekowsi earlier took down a quote of yours in the chatroom. He says I love this expression, “‘We pushed the pig out into market and put some lipstick on it.'” So let me ask you about that, what did it look like? I always love asking people about what the launch looked like. What did that pig look like when you launched?
Interviewee: It was pretty rough, it was pretty rough. It was exactly that. Everything often was in reaction too. Now we have a customer service department that consists of a dozen or fifteen people. It has hundreds of scripts and automated cron-jobs running; and originally that came about two weeks after we launched the product as people were complaining for whatever reason, “Oh, I didn’t get my points” or “What’s up with this?”, and so we had to build something fast for them to react to, and to complain to, and to send information through to. But it didn’t exist at launch, we didn’t know that we would need one, but it quickly became evident. We quickly plugged that hole and continued to evolve over time, you know, different tools to get more and more ads in to it, geo-targeting, and all the direct payment options, all that stuff came after and it’s just been added on and added on as the product evolved. You look at it today, even the front end of it, I’ll be the first to admit that our front-end is ugly and it’s not nearly as effective as it could be; and it looks a lot simpler that it actually is, but there’s a lot going on behind it. We’re approximately 75 people now, mostly in New York and San Francisco, and a lot of Rosemark people are working on this product development. But yeah, we built the whole thing in three or four weeks.
Andrew: What did it have?
Interviewee: It only had offers, it didn’t have any direct payment options. At its core it was pulling offers from maybe four or five different networks, it had maybe 40 or 50 different offers in the system, we did have some basic targeting of Canada versus the U.S. (just show Canadian ads or American ads), and it had a really simple postback system, so to track when a Facebook user clicked on it to database that ID and that click ID, sending information through to the network, if a lead happened, it just had some simple scrapers that were scraping the networks every 20 minutes to see if any leads come in, and then it would would associate those leads to the Facebook user ID, and then through a postback system and like a URL on their servers, they came to whoever and say, “Hey, this user ID earned this many points, please award it to them.” That was about it.
Andrew: You sold… by the way wow, it sounds like it still has a lot of features in it. How did you know what to put in that first version and what to take out, what was the struggle there?
Interviewee: The struggle was, how quick can we get this to market? How quickly can we clean this up and get it out there? There wasn’t a lot of product development, it’s not like we even had a whiteboard or anything. It was just myself and a couple other guys who just bang our heads together, and like, let’s get it, is it ready, sure let’s try it, try it out there, fix it on the fly… I’m always a big fan of
fan of throwing things out on the marketplace and seeing if they work, and seeing if they get traction. I think a lot of entrepreneurs get really wrapped up in trying to build the next great product. And even today with Facebook applications, building Facebook games, a lot of people spend a lot of time trying to build what they perceive as being the next great Facebook game. Then they push it out onto the market
falls flat on its face. That platform is really about iterating and making something that just does the bare basics of what you want it to do
push it out onto the marketplace; if it gets traction, then sink the resources into to drawing it, pushing the rest of those feature sets out,
having placeholders in there for them, but there’s just no need to have a complete product in the Facebook marketplace today. You can build the bones, see if it gets traction, if so, get behind it. If not, kill it and move on to the next one.
Andrew: There’s a lot of discussion here about the revenue at the time of sale
Andrew: and all kinds of numbers here being thrown around in the chat room. Can we get a little clearer on what the numbers were at the time of sale? I know it’s a private company. And I don’t want you to reveal anything that you don’t feel comfortable revealing, but maybe we can just clarify some of it?
Interviewee: It’s not my baby any more, to be honest. Like, you know, get me in a bar with a beer and we can chat about it, but I’m not going to put those numbers out on a public forum.
Andrew: Okay. Why did you sell?
Interviewee: It’s not my company. I sold the company. It belongs to another group of people, and I need to respect that they did so. And it’s their deal, so.
Andrew: First of all, we got to get together for a beer. But you’re in Vancouver and now I’m in South America. But maybe Vancouver’s the next place for me to move to.
Andrew: Why’d you sell?
Interviewee: Isn’t Noah down in South America right now?
Andrew: No. He was before, but he’s not here now. He’s now in the Valley.
Interviewee: Oh, okay. He’s back.
Andrew: As far as I know. So why’d you sell? You sold to Bret Brewer’s Ad Knowledge.
Interviewee: That’s right. I honestly felt like I had to. It was just growing to the point where it was bigger than me. It was -no, I’m still here.
Andrew: I’m sorry. You were saying? Why did you sell? Let me go back to that question.
Interviewee: Yeah, sure. I felt like it was growing faster than I could keep up with it. And we knew I needed to bring in corporate guys, guys who knew how to build infrastructure around this stuff. You know, I’m a great startup guy, and I can run a small team of guys. And at the time we sold I think we were about 25 people, but I knew that this thing was going to quickly quadruple in size. Revenues were going to grow and we needed that organizational, operational structure in place.
You know, I know I’m perfectly capable of running a ten million/100 million dollar company, but I don’t know that I’m the guy to run a, you know, 500 million dollar/billion dollar company. And absolutely Super Rewards has the potential to grow into that, and I want to see that happen. But I need people with that kind of experience to take it to that sort of scale. And I’m not that guy.
Andrew: And it turns out you sold at a good time. You sold just before the Scamville articles hit, just before there was all the controversy, right?
Interviewee: Yeah. But I wouldn’t say that those things were bad for business. I mean, you know, there’s some reputation management that had to be had there, but no. Those are all natural evolutions of the product and things that needed to happen and things that we, frankly, encouraged to happen and were there behind the scenes bringing it out.
I think, you know, the way some companies handled that and the way we handled that was very, very different. And that’s why we continue to be strong today, and other companies, you know, the Gambet for instance, is gone and off the power struggles. And a lot of smaller companies that were trying to make plays into the market, you know, companies like Double Ding and others are decimated. It was how they handled it. It was a natural evolution.
So I wouldn’t say that, I mean, I think I sold at the right time as far as, you know, being able to turn this into something it was. I don’t think we’d be where we are today without the help that Scott [Lin], the CEO of Ad Knowledge, and Bret Brewer, the President of Ad Knowledge, and Chris [Mutney], whose my VP. You know, these are strong, smart, experienced guys who have brought a lot to this company over the last year and turned it into, you know, this interview between the two of us has turned it into a lot more than it could have ever been me continuing to run this on my own.
Andrew: I’m surprised you’re still at the company given your history, that I imagine, in fact, in this conversation you’ve told us you have a lot of ideas bubbling in your head. How are you still at the same place?
Interviewee: Very shiny, golden handcuffs.
Andrew: I see. Can you talk about what that first million was like?
Interviewee: Exciting. Exciting. You know, it really kind of validated for me what I’d always kind of hoped for of, you know, proving to myself that I’m capable of doing this. I mean, I knew I was capable of taking something from nothing and building it into something substantial because I had just done it through Communicae and taken that company from literally next to zero revenues and, you know, huge debt and working together with, you know, the key players there and bringing it up to, you know, ten million dollars over the course of a few years.
So I knew I could do it. And so, I just wanted to go and do it again. And so, you know, it’s a really validating experience to see that happen. And it really did a lot for my confidence. And it also built a bit of a reputation for me which I was able to, you know, to leverage
Interviewee: …which I was able to leverage to bring more and more together, those relationships I’ve created with the CEOs of various other affiliate networks out there that I was able to then leverage in the next business venture, which also became part of the next business venture, and continued to benefit me to this day.
Andrew: What’s the best part of it?
Interviewee: What’s the best part of it… controlling your own fate, and really feeling like you dictate and control where your life and your business and your vision is going, and being able to bring that together and bring that dream to life, part of these little ideas that bubble around in the back of my head, it’s not always about the money or the success around it, it’s about bringing something to life. It’s a creative process. It’s no different than painting a picture or even in some sense something so simple as working on a car. You take the engine out, and you take it apart, and you put it back together again, and you put it back in the car and lo and behold the thing, it runs! It’s a really exciting process, to build something. So that’s really what excites me and makes me tick and right now with Soup Rewards it’s now a big business that is part of AdKnowledge which is a much much bigger business – collectively, AdKnowledge is the fifth largest ad network in the world, after Google, Yahoo, Amazon, Facebook and then AdKnowledge. It’s a big company, with a lot of great strengths, and so it’s fun to be a part of that and I can still find small things to build, little projects that I’m working on that give me that same sense. But it’s not the same as taking something that’s a hundred percent me and bringing it to life, and so I look forward to doing that again. My wife likes to hold onto a fantasy whereby I retire or something after this is all over, but I don’t think I’m capable of not doing this.
Andrew: And that answers the question that somebody in the audience had about “Does he get hot chicks now, because he sold”…
Interviewee: My wife is the most beautiful woman on the planet, but she didn’t pick me for my success.
Andrew: You guys have been together for how many years now?
Interviewee: A long time. We have an eighteen year-old, and a thirteen year-old.
Andrew: Oh, wow! You have a thirteen year-old and an eighteen year-old, you said?
Interviewee: Yeah – I’m an old man!
Andrew: Good lord! Yeah, some people are saying they thought you were eighteen, others thought you were thirty – no, based on the times, not eighteen.
Interviewee: I’m pushing forty. I’ll be, I don’t know, 1971, whatever the math is.
Andrew: Let’s see if we can close it off by giving some advice to people who want to follow in your footsteps. So, you seem to be one of these guys who’s not a mercenary, you’re not just out there to make money, you’re not a missionary, you’re not there just to change the world, you’re building a business – what I’ve noticed and what I’m calling in my interviews a tinkerer, constantly trying new things.
Andrew: And if somebody else is like you, what advice do you have for them, for building these businesses?
Interviewee: Just don’t stop! Just keep going! Just tinker and tinker and tinker and tinker and eventually something will come together. Don’t give up and don’t be afraid to think big, you know? I think that was one of my challenges early on, I didn’t think big enough. I was toying with concepts I could comprehend. I could take an engine apart and I could put it back together again – great. I can take the retail model, like even with perfume.com, take bottles of something, bottles of stinky water, and sell them to people, right? And even with the book – I could make a book, I know people will want this book, I can add some value to this book, and I can get this book printed and I could distribute it to people and people will buy it. Okay, success! But, to be able to scale things up, and that’s what I love about the interwebs, is that you can scale things on such massive proportions. That’s what I would encourage you to do, is think big.
Andrew: And at the same time, start small, start with the pig, start with something that you can get up and running quickly that’s just the bare essentials…
Interviewee: And stay away from those fucking VCs man, they’re all sharks and crooks, stay the fuck away from them.
Andrew: Stay away from the fucking VCs. Can I add another one that I think I am picking up on, and tell me if I’m right on this – look for revenue…
End of 1:00 – 1:05
Andrew: I didn’t see you do things just for traffic, you want the revenue too.
Interviewee: Absolutely. Eyeballs are worthless if you can’t monetize them.
Andrew: Okay. Alright. Let’s leave it there. Thank you so much for doing this interview and thanks for coming back and doing the second half of this interview.
Interviewee: No problem
Andrew: And I hope I get to meet you at some point soon, and we will have a beer and have a private conversation about what happened behind the scenes.
Interviewee: Sure, it is my pleasure and make sure you get my [unclear]
Andrew: They are all good. And Kareem Mayan thank you for making this introduction. This is one of I don’t know how many introductions that he has made that had been terrific.
Interviewee: Yeah, Kareem is a solid guy.
Andrew: Yeah, thank you guys all for watching. Bye.
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[This interview is a result of yet another great intro by Kareem!]