How Quietly Became A Top 50 Site By Operating Like A Real Business

When I asked him how he got his early customers, Steven Boal, founder of, didn’t say that he courted the digerati or threw a launch party. Instead, he told me stories of how he convinced packaged goods companies to try digital coupons by waiting in their lobbies longer than most people would have been willing to or jumping a redeye to get a prospect to run a small test campaign with him.

I implied that what was describing didn’t sound like a sexy business. “It depends on your definition of sexy,” he said. “‘Sexy’ to me is [being] profitable [and] hiring and saving consumers an awful lot of money.”

Listen to the full program and you’ll hear how he and his team did it.

Steven Boal

Steven Boal


Steven Boal founded Coupons, Inc. in 1998 and is responsible for it’s strategic and operational direction. He previously served as vice president of Business Development for Integral Development Corporation, a privately held Silicon Valley financial software company whose investors include Accel Partners. Prior to that, he was vice president and head of Global Emerging Markets Derivative Technology at J.P. Morgan. Before that, he was president of OptEdge, Chicago-based real-time options, analytics and risk management business.



Full Interview Transcript

Andrew: Ok. Before we start I’m gonna ask you for your input. I want to find out how I can use surveys and forums to figure out what my audience wants here on Mixergy. See I’ve got a sponsor in Wufoo. is a place where you can go to create forums and surveys and you can embed it to your website. And I want to them to learn more about my audience. So I’m asking you how are you using forums? How are you using surveys? How are you getting feedback from your audience? How do you think I can do it using Wufoo forums and surveys? Wufoo W-U-F-O-O dot com. All right, you also know about my sponsor I’ve used them for a long time as my phone system. They’re the virtual phone system that entrepreneurs like me love because you can use your own phone with it, you can manage the whole thing online. They have all the features like bus systems like extensions and voice mail that changes depending on what time of the day and who’s calling and all that. And it’s all managed easily online so check out I’m a member and I think you should at least check it out. Also is a place where you go to create a great store that has all the features that you need in an online store. If you create a store with, well actually why don’t you see for yourself? Within five minutes you’ll create a store and still there’s a feature that you need in an online store that they don’t have. If there is, let me know. All right.

Hey it’s Andrew Warner founder of home of the ambitious upstart. You guys know what I do here on Mixergy is bring successful entrepreneurs to talk about they built their business, to hear their story and to find out what they learnt along the way. I want to tell you before I introduce to you Steven Bolt[sp] today’s interviewee. I want to tell you how I decided to interview him, how did it even occur to me? One of the past guests here on Mixergy, Kareem Mayan saw an article about is just tearing it up online and people just aren’t noticing it. He sent me an e-mail saying Andrew you should find out who runs the company and see if you can interview them. So I e-mailed and I’ve got the guy behind

Coupons is, is the leader in digital coupons. It is, dig this and I dint know this before I started my research about the interview with you Steven. That is the thirty ninth largest website in the US. You’re approaching a billion dollars in printing savings. You are phenomenally big. Every time I look at the top hundred websites in US, I must come across your name and still it doesn’t hit me because you don’t have the fanfare of a Twitter or a Facebook or any of those sites. But you’re huge! What is, let me start off by. I just described the company form my vantage point now after doing a little bit of research. Can you tell the audience what is from your point of view?

Interviewee: Absolutely. Absolutely. is the world’s leading provider of digital promotions. That’s the fastest way to summarize what the company does.

Andrew: And what does that mean? Digital promotions?

Interviewee: So about twelve years ago, digital promotions,when we started the company meant moving coupons from you normally would traditionally find in the Sunday paper onto electronic media, the Internet and printing them at home or at work at your desk. Over the years, over a decade, now I can say that with some confidence. Yeah Digital promotions have evolved not only the things that you print and deliver on your own printer you know in a kiosk in a grocery store or at work, but also delivered through mediums like your mobile phones and consumer electronic devices, unified barcode and things like that.

Andrew: Okay. All right. Let’s go back and find out how we got here. Where did the original idea come from?

Interviewee: So, you know I wish I could tell you I’ve been a life long coupon clipper. I’ve certainly turned into one over the last twelve years. But actually I was visiting my father in law and reading the Sunday paper when he pulled the coupon section out and started cutting through it. Now I’ve been married for a period of time and thought sure the lesson being delivered to me was be frugal, treat my daughter well and you’ll be successful in your life. And so I looked at him and asked him some questions and pointed out the fact that I’m not a Saturday coupon collector. And he got a little agitated with me. And he yanked down a shoebox full of coupons and demonstrated for me which coupons could be doubled on which days of the week, which grocery stores use which types of coupons. And it was only two weeks later, when I picked up the newspaper and I remembered the scene with my father in law that I got on to the Internet and researched what this coupon industry was all about. And it was literally a forehead slapper. It’s a six and a half at a time million dollar industry, six and a half million dollars. And one that hadn’t changed say for things like barcode changes, over the past twenty five years. And so it was from that drum of an idea that I set out to try and shift what was then targeted to be that market place onto electronic media.

Interviewee: Electronic media.

Andrew: Where you looking for business at the time where you were watching what were going on the internet and saying I need to find my version of

Interviewee: No. This was a left field shot something that I stumbled upon completely while I was doing something else.

Andrew: Let’s talk about what you were doing before then if you don’t mind. You were on Wall-Street, no?

Interviewee: I was. I spent most of my career at the inner section of Wall-street and technology. So I would best describe it as building systems for people and firms that’s a very complicated transactions whether they be high speed transactions or very complex transactions and try solve them in a systematic way. And that’s actually what I was doing right before I started the _ company. Interestingly enough, what I am doing today is not too far afield from solving very complicated transaction processing problems that exist in the market place. The difference of course is that _ have a dollar emotional value as opposed to credit _ _ emotional and they are just Asian period every time they take to bake as a trade or _ is about half a second. And your big complicated transactions between banks sometimes take months to negotiate and execute on. So it is financial transaction processing, audit security in control, just different types of economics.

Andrew: Okay right, so you have this idea you say well why I not digitize this, what I am seeing in shoe bucks. But I am trying to figure out how you made the leap to entrepreneurship. Why did you decide to go start a company? Where you always looking to be an entrepreneur? You were an entrepreneur for long time and found yourself on Wall-street. How did that leap happened?

Interviewee: Yeah. Actually this is 3rd company _. And I started with my 1st company when I was in high school writing software for law firms. Then I jumped in to the Apple world, the software world there and started another company. In college invented a few products, and right after school started to work for a company that the CEO resigned from within a very short period of time with me joining. And, actually sorry I missed the staff in there. But I get back to that in a minute. And that _ down path of company leadership. So parent company brought me out to California. That’s New Yorker located to the Bay Area. Really cut my teeth building that company then moved to Chicago and ran an option trading and Lyrics Company. And when I was done with that company looked for some advice on what to do. And I was really itching to get back to California and so the folks that I turned to, involved for big career advice at the time told me that I had lot of fun being a small company entrepreneur. What I really needed to do was go work inside a big company and experience the kind of frustration in growth that you can find doing that. I did that for 5 years so that when I am ready to be an entrepreneur again I will have a lot more experience. So I took their advice and went to JP Morgan. I spent more than 4 and a half years at JP Morgan, didn’t quite make it to 5 and then was back in California.

Andrew: Okay. Alright now I have got a better picture of it. So, you come up with this idea. What’s the 1st step that you took?

Interviewee: The 1st step I took after doing some research was to locate some of those I had worked many years prior who I felt would be perfect architect and thought partner in building this business. _ I lost no moment to get in touch with him. Like his wife is a relatively well known science fiction writer. And I so found her, sent her note. Dear Martha, It is Steven _. How are you? I am looking for Mike. I have an idea I’d like to discuss with him. I am sure her 1st reaction was Oh no. We have been down this road before. But she went ahead and put me in touch with Mike. We had a great coffee together at _ _. Talked about a potential architecture for doing this. We were wrong about the original architecture but at least it got us off into another business together. And then a classic story. Some research and development. 1st server that gets installed in your basement. 1st move to dance center. We can spend some time talking about all those fun stories. And then you fast forward to today. We have got a couple of hundred employees, offices around the world.

Andrew: No, stick in a little deeper into what you’ve said so far. The 1st thing that I am curious about is why would you say Oh no. What road did you guys go down before.

Interviewee: You know the classic road of 24*7 company building together.

Andrew: I see. O so this is the person who you started business with before.

Interviewee: Yeah.

Andrew: Okay, Alright. I got it. She is saying O no and she is right probably. How many hours a week do you think you’re working in the beginning?

Interviewee: Probably 24 hours a day, 7 days a week.

Andrew: Well, for how long? I just got married now, I wonder for how long you can leave your wife at home, or you’re out there working before your wife leaves you at home.

Interviewee: Okay, so that’s a fair question. This company was founded by three people. It was founded by myself. My cofounders are Mike and my wife, the three of us.

Andrew: I see, okay. So this is Michael Walsh, he is the cofounder?

Interviewee: It’s Michael Walsh, that’s correct.

Andrew: Okay, all right, I see. And so you’re able to avoid the wife sitting home by bringing your wife to the office and partnering up with her?

Interviewee: Oh, remember, the first office was the home.

Andrew: Oh, that’s right. Okay, I did miss that part, yes.

Interviewee: Yeah. Okay. And so the three of us actually started the company together, we moved out of the home as a company when we hired our first employee.

Andrew: And how long was that?

Interviewee: Within the first year.

Andrew: Okay. All right, and you said that you had the original architecture and then you had to change, what was the original architecture?

Interviewee: Well, this industry is an industry that hasn’t really changed much in the 25 years that it had existed before (inaudible). And therefore the plan was to try and deliver coupons to people securely and fit into the ecosystem that existed today.

Again, 6.5 billion-dollar industry, a very big offline ecosystem exists, and you can’t move too much of it at once. And so we spent about three years really perfecting — and by perfecting I mean mistaking and correcting how we would deliver security and at the same time flexibility. And so it started off being an application and moved it more to a services model.

And you know, you do the classic things in the beginning; we delivered an application, we were very excited about it. We had a few users; we wanted some more users, so we put out a press release announcing product of the world. We heard from Prime Time News in Seattle and San Antonio they were going to run the story, Prime Time News.

We begged them not to do it, we didn’t want that kind of exposure when we were first testing, you know, this is back in the wild days of the Internet, this is ’98-’99.

And so the big complaint they had was they couldn’t get it to work, it was crashing. So instead they put a big monitor up. We got tapes of this, particularly one of the broadcasts, and the announcement was “The Internet is here, you no longer need your Sunday paper, save hundreds of dollars a month.” And at the time we were called

Well, you could imagine what happened. First of all, the server, singular crashed. And we needed to do fast work to repair that. But the more interesting thing was how many coupons we actually had in the system at the time. Would you venture a guess?

Andrew: How many coupons you had in the system at the time — you were in the late ’90s, you probably were trying to do something outrageously big, I mean it’s say, thousands. But I see —

Interviewee: We’d one.

Andrew: How many?

Interviewee: One.

Andrew: One, one coupon. If I went to —

Interviewer: One coupon.

Andrew: —, I would see one coupon.

Interviewee: At the time we had our first client, this is right after we launched, it was VeryFine Apple Juices, $0.25 off of VeryFine Apple Juice, and the rest of the offers that we had in the system were affiliate links. You know click here to save at Fogdog Sports, click here to save 10 percent when you shop at this online merchant.

Andrew: I see. So that answers the question that I was going to ask you; how did you fill up your store before you had an audience? And the way to do it is to work with affiliate programs that already exist, and that way you can fill up your store until you find those direct connections like the apple juice coupon.

Interviewee: So that’s the way it started. But when I talked about the first three years in perfecting the model, we did move away from that. And really, the first services that we delivered as a company were services to the packaged goods industry, so that they would take their own websites and their own promotional programs, and they would issue coupons to consumers using our platform.

And so we didn’t really have an audience-building problem early on in the life of the company. We really had the problem of trying to get manufacturers to adapt our platform, our technology platform while there were genuine concerns about fraud and security.

Andrew: Okay. Actually, I’ve got to say I’m not following it and maybe it’s my own fault, but I see that there was a three-year period there where you were going in one direction, and then if I’m understanding you right, you had to switch and change course after three years?

Interviewee: That’s correct. During those —

Andrew: And the first three years you were building an application of some kind, and what was the application that you were building?

Interviewee: During the first three years, we were building the infrastructure, the backend to support scaled promotions, but we were also thinking about consumers. And what we did during those three years and particularly near the end of those three years, we shift away from thinking about a consumer vehicle and think more about how manufacturers, people who provide coupons, and again the off line world: 350 to 400 billion coupons are distributed in this country. A year. So we thought long and hard about how those folks would deliver using the internet to their consumers.

Andrew: I see. So first you were going to go straight to consumers and then you said, ‘Let’s go to the businesses that would want to reach consumers.’ Why did you make that switch?

Interviewee: We’re technologists. And so we never had our sights set on being a world-class large direct marketing organization. We had always suspected that our business would be one that was built on transaction processing fundamentals. You know, tollgate processing. And that’s both of our backgrounds and experiences, building high volume, transaction processing systems. So over the years we’ve built an infrastructure that has become synonymous with online couponing. In fact, it was quite an honor…I just received a book from somebody who wrote about couponing ñ not about online ñ and there’s a whole section devoted to online couponing. And it says in there ‘bricks’ are coupons that are delivered on the websites of manufacturers. And ‘bricks’ is our trademark. So being the Kleenex of the tissue industry, you know being the Kleenex of the online couponing industry, was quite an honor for us.

Andrew: Let me ask you this. Today, what percentage of your business is done directly with consumers and what percentage is done in helping companies reach consumers? What’s B to B and what’s B to C?

Interviewee: So 100% of our business is a combination of the two. It sounds like an easy escape from the question but the truth of the matter is that we fulfill many roles in the ecosystem now and we have gone back to our using our platform to reach consumers. And so today we’re not only the largest issuer of digital promotions direct to consumers, but we are also the largest issuer of digital promotions for manufacturers to their consumers. Both of those. And so we don’t break out the distinction between the two because it’s very fluid between them. Manufacturers may promote to consumers on their own websites, in their own direct mail or direct email campaigns and also direct mail through our platform. And they may extend those offers to consumers through our platform. The same thing happens with retailers. Retailers will reach their consumers directly using our services. And then at the same time, extend those promotions across our network to reach our 20 million plus uniques a month.

Andrew: Okay. All right. Let’s see…I’ve got a bunch o f questions and I’m just going to keep writing them down so I don’t flood you with all of them. Can you take me through the first three years and how you realized you were going in the wrong direction? Because what I’m finding in my interviews ñ and also in my own life ñ is that entrepreneurs will go in one direction and they will see that it doesn’t jive with who they are and they’ll see that the market doesn’t love them for the direction they’re going in, but because we’re so determined we keep at it and we keep at it and we keep at it until we finally, one day, look over our shoulder and realize that months or years have passed. So I’d like to understand what that was like for you? What was that experience, from your perspective?

Interviewee: So again, we always suspected that we would build a platform for issuing digital promotions. What we didn’t realize early on is that building consumer audience is a very, very hard business. We expected that if we have a value proposition from manufacturers that the consumers would find it. It wouldn’t be a difficult proposition. And neither of our backgrounds were in direct marketing. And so over the course of those three years we were making some progress issuing to consumers for manufacturers, slowly. Very, very slowly. Because we needed to get manufacturer adoption in. But what we realized once that snowball started to roll downhill was that building consumer audience is a very, very tough proposition. And there are world class companies that do this exceptionally well and then there are guys like us that need to learn the hard way that you really need to in source those expertise. You need a whole team of people that understand direct marketing and metrics, audience acquisition, ROI, long term and short term.

Andrew: What type of techniques did you use to try to bring the audience in that you realized the hard way wasn’t working?

Interviewee: Well, the age old trick is the press release and that doesn’t seem to work too well. You know, ad banners…

Andrew: You were buying a bunch of ad banners?

Interviewee: We were buying banners. We created our own affiliate outreach program and we had other people signed up for it. We had, I would say about five years in, we had probably the worst idea that we’ve had as a company. That we thought was going to be the explosive opportunity for us.

Interviewee: — worst idea we’ve had as a company that we thought was going to be the explosive opportunity for us. And when I say “the worst,” I mean it was really bad.

Andrew: Good, what was it?

Interviewer: You want to hear it, don’t you?

Andrew: Yeah, absolutely.

Interviewee: So there were lots of companies that do direct in an envelope or in an insert couponing for local merchants. So you know, dry-cleaners, professional services organizations, dentists, doctors, restaurants.

And so we were about five years in, we were starting to build a little bit of an audience and some credibility in the industry. And we had literally a harebrained idea that we were going to be better, we were going to be stronger and faster because we were an Internet company.

And so what we did was we hired somebody to run our local merchant program; we called it Expand Your Reach. And the notion was that we would hire a rep in every zip code, and we would give zip code exclusivity to people. And we’d a great domain name,

And so what we would do is we would charge the local sales rep $25, just to separate out, sort of the not-so-rational from the rational. We would send them our pop tents for countertops, windows (inaudible) keys, business cards, and they would go into the merchants in their neighborhood and they would say, feast yourself on for this price.

So I called a friend of mine, who at the time was running the largest direct mail couponing organization. We worked together. And I said, (inaudible) say his name, I said, “Look, I think we can beat you. I think we are better than you, smarter than you are, we are an Internet company.” And he said, “Why don’t you give me a call in about a year when you figure out how hard this is?”

And I said, “You’ve got it.” And so we ended our working relationship as friends, we did not speak over the year. We sold more merchants than we sold coupons, and about a year later, I called her back and I said, it’s a year approximately since the time you told me to call you and tell you when we failed. I’m happy to tell you we failed; we are shutting the program down, this is not the way we’re going to build our audience. And we carried on doing the things that you do when you’re trying to build a business.

Andrew: Why didn’t that work —

Interviewee: So that was — what’s that?

Andrew: Well, why didn’t that work? You were charging people 25 bucks a pop to be your local reps, so you were selling this opportunity, and people paid and so they were a little invested in it. And then it was on them — I see actually, because how do you motivate them to go and make sales for you? How do you know that you hired the right people and not just people who have $25 in their pockets and desperation to succeed?

Interviewee: Not to mention people we’ve never met before.

Andrew: Right, right, I see.

Interviewee: So now we’re sending people into local merchants that, you know, who knows, they get turned down for a sale and they kick a window out. It was a very poor idea.

Andrew: And you were even hoping that they go in and knock on doors, and not just giving up as soon as they get all the pop tent and everything else you sent them?

Interviewee: Correct.

Andrew: I see, okay. All right. So that brings up another question, which is where did all this money come from. Can you talk about the investment in the business?

Interviewee: In our business?

Andrew: Yeah.

Interviewee: The business has been privately funded over the years, is not in need of financing. It’s a healthy business by most measures, and it’s just been privately funded.

Andrew: What kind of funding did you guys have at the beginning?

Interviewee: What you mean by what kind?

Andrew: Or can you say that — you know, it actually is — it’s an interesting question because for some people when you say what’s your funding, it is a point of pride. Because then they get their point, they’re venture capitalists and say, look these brilliant guys behind me backing me, don’t you know their name, that ends the question. And now, we’ve — they’ve shown how great they are.

For other people, where is your funding is much more of a private question, it’s like saying how much money does your wife have in the bank account. You know, not even you, it’s that private. So my sense with you after asking the question, it’s somewhere in the middle and it’s further away from the look at my (inaudible) section.

So to the degree that you can talk about it, I’d like to hear it. If you can’t, that’s fine too.

Interviewee: Sure. You know, all I’ll tell you is that we’ve raised a substantial amount of money over the years to build a platform that has become a real gold standard in the industry. It’s taken a lot of investment in infrastructure and in personnel, but the company is private about its financing.

Andrew: Okay, all right. Let’s go on to what happened after you changed. Three years, big change in the business; it seems a little more gradual than just an overnight switch, right?

Interviewee: It was definitely gradual, and back then — it’s easy to forget, but I remember it well — you know, I would fly a red eye, at a moment’s notice to get a $2,000 test out of a company, just to test our services. Because at the time, there was a lot of concern about being able to print a financial instrument at home or at work and then take it into a store —

Being able to print a financial instrument at home or at work and take it to store. What would be the duplication _ be. Would it be a sustainable model? Well I remember the stories of selling 10,000 prints to test services to a client. And then 3 months later going back to the client and saying we got through 2,000 of them. Stick with us, I promise you we will get through all 10. And having had the big company experience, looking into the eyes of the client who is thinking I am spending 10 minutes way more than I should at this point.

Andrew: Can you tell me one of those stories? May be, I love hearing sale stories. Can you take us through a story from back when you where a nobody trying to convince somebody to work with you and how you landed that sale, convinced them that you were worth doing business even though they didn’t knew who you where from Adam and where that relationship grew? We lost the connection but just before we did. I now edit this all back in. But just before we lost connection, I was asking you if you could tell us a story about a customer that you won over back when you guys were nobodies.

Interviewee: So like I was saying, I was with our _ sales. He spent 25 years in the industry prior in the offline industry prior and very ( 2 times) successful and knew a lot of clients that we wanted to reach. Are you there?

Andrew: Yeah.

Interviewee: OK. And knew lot of clients that, we wanted to reach. And so we flew in for the meeting. We stayed in the hotel and got to office in 9 am. And we literally sat at a couch in the lobby until 4. 4 o’clock we had a 9 am meeting. And I was ready to leave. It was not fair clearly. And he kept telling me to sit down and relax. And at 4 o’clock sure enough, the client comes out and says you are good to wait. Sorry about that, had meetings whole day. Didn’t mention anything else, about having us had sat in the lobby, for the entire day. And we spent an hour together and we walked out of there with the order.

Andrew: How the guy clearly didn’t take you guys seriously enough even to show up a little bit late. He kept you waiting for 7 hours. Is it 7 hours or 8 hours?

Interviewee: Almost 8 hours actually.

Andrew: So how did you convince him at that point to work with you?

Interviewee: He might have just felt bad but did not want to admit. But look at that point, we’d taken however we got it.

Andrew: Okay. So what happened with that partnership?

Interviewee: It is going well. It is a very nice client of ours today and we have got awful lot of programs from them. We have graduated from a couple of thousand dollar tests to multimillion dollar orders.

Andrew: Do you ever really needle him about that? Do you ever get it out of your system to say Hi look, what happened back then, what did you do?

Interviewee: Well, the good news about the industry that we service is the companies have been around a long time but people change. And he has moved companies 2 or 3 times since then.

Andrew: I see. Okay. When your partner said let’s just stay here it will work out, is it because he knew this was the way things work in the industry?

Interviewee: Your question is chopped out a little bit there. I am Sorry.

Andrew: I was saying why did you guys stay? Did you stay because that is the ways things are in the business or did you stay because you are determined to make your company work?

Interviewee: I think it was the latter. We are determined to make this work. We took a lot longer than we thought it would. I get a lot of amusement out of people who call us an overnight success. 12 year night. But you have to be passionate, you have to be determined and you have to be pig headed to a certain extent to get your message across when people are telling you it is not going to work.

Andrew: Alright why do you think that you guys don’t get the credit that you deserve in this industry? Why aren’t as many people talking about _ as they are talking about lesser websites that don’t have the traffic, that don’t have the revenues, that don’t have the profits.

Interviewee: We just have never been a noisy company when it comes to company activity. We have a consumer facing brand _. And it is very successful. But from a corporate perspective, if you look at companies like the ones you’ve mentioned. There is an awful lot of buzz and an awful lot of big aura around the companies. It is market shifting. It is transformative. All the terms that you would expect. We are doing the exact same thing for the industry. Quite frankly not a lot of people understand well. And that is been some of the secret to our success to date. That is changing for us because being a top 50 web property and the client base that we have is almost every consumer packaging company in the U.S. uses our platform in some capacity today. All the retailers in the country interact with us in some capacity. We have a fantastic mobility platform. And so these things tend to raise your profile. But from a company perspective, we have never really been noisy about our success.

Andrew: Guy in the audience when you were telling the story of how you stuck it out at that lobby, [INAUDIBLE] in the audience is saying… or I can’t see who that is in the audience, was saying that they would have left and talk about commitment. Yeah. That’s impressive to stay there for that long. Sometimes I get hot-headed and want to leave and I know in the moment it’s got to feel just insulting and needling and you want to get up and go. And Andrew SG is saying that the reason that you guys don’t get the same type of attention is that because everyone’s focussed on the cool companies that generate buzz. You guys aren’t a sexy, Web 2.0 type of company.

Interviewee: That’s true. We’re much more of an infrastructure company than we are a ‘sexy web 2.0 company’. But, it depends on your definition of sexy. So sexy to me is profitable, hiring and saving consumers an awful lot of money. And so you know, I fit here our definition of sexy.

Andrew: Did you guys ever get into, or consider getting into, social networking? Did you decide that maybe all the people who were clipping coupons should be friends with each other and share coupons or any of that? You’re smiling as I say it so it doesn’t sound like it’s in your corporate culture.

Interviewee: Actually, it is in our corporate culture. It’s funny, again an example of us not being noisy as a company…You know, we’re integrated with twitter. We’ve got a lot of followers there. Our systems produce alerts to people when there are new offers. The big transformative thing ñ macro transformative thing for us as a company ñ is that we used to get an offer, call it $1 off a product, and it would sit on the shelf for four months and anybody could get it who wanted it. Today we’ll get an offer to print a million coupons of $1 off something, a cereal, a beverage, a pasta, it’ll be gone in three days. So all of a sudden there’s a little bit of scarcity in our marketplace and so things like twitter, which is the first example of our real time messaging platform, and there are other examples emerging, and things like social media where you can quickly spread the word when there’s something of high value to a certain group of people so that folks don’t feel like they’ve missed out on something. And if you think about it it’s a really big difference. You know, an offer for $1 off of pasta that sits around for three months, that if you happen to stumble across our site, you’ll use. Or $1 off a pasta today that show s up on the first of the month and is gone; it’s depleted on the third of the month because the offer’s available on all the recipe websites, on all of the grocery retailer websites, on all of our websites, in kiosks in grocery stores, on printers by Hewlett-Packard without even going to the web. Literally, in the printer that Hewlett-Packard is selling today there’s a coupons button. You can choose the coupons and print them. So social media is an important aspect of what we do. And of late, specifically of late, we have clients that are running very interesting, innovative programs in the social media space that tie in coupon printing, direct mail, tell-a-friend type of response programs that are working very, very well.

Andrew: What’s the…well, I’m trying to figure out which of these questions from the audience I should take. How about we take from 140 Ads in the audience who is saying how much has twitter changed the speed of the offer uptake?

Interviewee: That’s a fair question. We monitor and measure everything that we do. I think that we have somewhere in the neighbourhood of 10,000 people following on twitter and then it’s republished on lists. I don’t know how that racks up. I know it’s certainly less than…I can’t remember the guy who got to the million. Who’s married to, I guess it’s, Demi Moore. Tell’s you how little I know about some of this stuff.

Andrew: Ashton Kutcher.

Interviewee: That’s it. Thank you. But it does change. So those that follow do react quickly.

Andrew: I see. But you’re not allowing them to share it on their own twitter stream or encouraging them to do it, are you?

Interviewee: Absolutely.

Andrew: You are? So there’s a tell-a-friend component to twitter and there’s also a follow the twitter account and find out what’s coming up?

Interviewee: Correct. And there’s also lists. So we’re followed on lists and lists are followed by many people. So it’s 10,000 direct and I don’t know how many indirectly. 100,000? Who knows? But today to have 50, 100,000 people following us on twitter isn’t enough to show a dramatic shift in the way our offers move. Because like I said, we have 20 million plus unique visitors a month engaging with our services; and that’s uniques and people come back multiple times a month. So in the era today where we print literally millions and millions of coupons every single day having that many followers on one of those services isn’t really enough to move the needle in a significant way.

Andrew: You talked a little bit about some of the publisher partnerships that you have.

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Andrew: –some of the publisher partnerships that you have. Can you talk about how you got them in the early days?

Interviewee: Well, in the early days everyone was testing. So it was easy to get a test with publishers and with others. What was hard was to sustain it. So, it’s been a gradual step function. If we had too much content, too many coupons, then we weren’t moving enough of them, they weren’t printing fast enough. And so the content providers, the manufacturers primarily, would grow tired and not want to re-up and not want to spend more on the platform. Conversely, if we had too many consumers, we’d run out of coupons. And we did have a screen in our system that said, ‘We’re sorry, we’ve run out of coupons.’ But then publishers would get tired because they weren’t earning revenue when you didn’t have enough content. So we very methodically built, year over year, step over step, content audience, content audience. So that today, on any given day, our publishers are able to serve to consumers between 150 and 200 offers in their market every single day they’re available for print. Producing 150 to 200 dollars in savings for a consumer to be able to print. And so from a monetization perspective today, publishers have content and that content is of real value to consumers. Particularly in this economy.

Andrew: What does it look like when a publisher runs coupons from you?

Interviewee: It can look like anything. All the way from we host the look and feel for the publisher,

Andrew: And so in that case it looks like a coupon store almost, where you go in and you clip the ones that you want and you get to take them with you?

Interviewee: Correct. And it can look like the publisher’s site, even when we host it and we call that micro-siting. All the way to our web services platform. So there are many publishers and third party providers who use our base platform, on top of our web services, and build their own applications on top of it. So an example would be Yahoo! Deals, for example, where they built their own applications on top of our web services platform. In fact, our platform is used by folks that you might consider to be competitive with us, who build on top of our secure distribution platform other added value services. Like retailer services and other types of things.

Andrew: Do you have an example of that?

Interviewee: I do, but I won’t name them for you.

Andrew: OK. So will a user actually be able to find out that it’s that’s powering the site that they’re on? Not necessarily?

Interviewee: Yes. Although we don’t always put our brand on the website itself, we do brand each coupon uniquely and that is important because our coupons are intellectual property. They also have what I would call the seal of approval. Retailers know them, manufacturers know them, and consumers know them. And they know they’re getting something that’s trustworthy.

Andrew: OK. When we mentioned, what I said earlier in the introduction, that you guys are approaching a billion dollars in printed savings, is the billion dollars overall since the beginning, and is it just based on how many coupons have been printed or how many have been used?

Interviewee: Actually we printed almost a billion dollars in savings in 2009.

Andrew: Oh, I see. So that’s just for last year?

Interviewee: That’s correct.

Andrew: And what does that refer to? How many coupons were printed or how many were used?

Interviewee: It’s a combination, but it’s how many coupons we issued, and the face value of the coupon, and how many were used. This year we’re targeting multiple billion dollars, multiples of billions of dollars in printed savings.

Andrew: OK. And what about non-printed? What about what’s happening in the future? Will I be able to use my iPhone somehow and just get discounts without printing anything out, without showing that I even have a coupon? What do you see coming down?

Interviewee: That’s an excellent question. Over the years we have seen a whole bunch of technology’s solutions emerge for mobility, for mobile couponing. None of them really have had much thought put into high volume checkout. Grocery store, drug store mass. Lately we’ve been seeing some shift and what we did was we looked at the landscape, observed people shopping in grocery stores, and talked to retailers. And really the only way the consumers engage with technology, in a grocery shopping environment, is when they’re building lists. Building and using lists. So we bought a company, they had a product called Grocery IQ, it’s often times the number one selling lifestyle app, and always in the top sold apps in the app store. Our android version is coming in another week or so and you guess why we’re doing that? We’ve got an android guru on staff now, and it’s integrated barcode scanning, list building, list sharing, and of course, couponing.

Interviewee: …list building, list sharing and of course, couponing. And so now when I say…when I add a product to my list, cereal, cottage cheese, pasta, what have you, I can scan a bar code and have it show up on my list. It will sync with my spouse’s list. I’ll be able to do all sorts of other entry mechanisms, which you’ll see with Android coming, and then as I’m walking through the grocery store I check them off. Well, at the same time we say, ‘There’s a coupon.’ And so if there’s a coupon for the product or in the category I check it and I have an option. I can print it right to my printer wirelessly, off my iPhone, an Android phone. Or I can drop it right onto my frequent shopper card. And that’s the most thoughtful way of getting consumers through the checkout process without slowing them down. And that’s really, really important in high volume. It’s easy in a restaurant. It’s easy in big box retailer. It’s easy in the consumer electronics baser to show a bar code on a cell phone or show a code and have it keyed in at the register. But when you’re moving people through the checkout lane you have to integrate with their technology in order to not slow them down.

Andrew: I see. Because otherwise I would just have to show coupon after coupon on my iPhone and just keep sliding it over for them to scan in.

Interviewee: Yeah and also heaven forbid you hand your iPhone over and somebody drops it. Or you put it over the scanner and it puts a little scratch in it. Whose fault is that? That becomes a real consumer experience problem that you have to think about.

Andrew: Instead, if I’ve got the card from the supermarket it’s right in there. All I need to do is punch in. I don’t even have to show them my card from what I remember being in the US. You just punch in your phone number, they know what card it is and they can deduct it automatically.

Interviewee: That’s correct. So for example, you take our grocery IQ application, which hundreds and hundreds of thousands of people use, and I tap the coupon, I drop it onto my loyalty card. It’ sin my shopping list now. The big problem with total electronic couponing is that you have nothing that reminds you what’s in your list. So you have no reason to buy the product if it’s not top of mind. That’s why paper coupons are so successful and will be for a long, long time to come. But now in my integrated shopping list, I have my product and I have my coupon. I’m in the grocery store. I check it when I add it to my basked. So for example, I shop at Safeway here. I walk into Safeway, I go to the checkout lane, I punch in my phone number or I swipe my shopper card, my coupons are automatically deducted.

Andrew: And what’s great about that is I don’t have to embarrass myself by pulling out coupons. I just have my iPhone out. I look cool.

Interviewee: That’s not embarrassing.

Andrew: Well, I guess maybe not. Maybe you’ve been in the business more than I have and you’ve seen it differently. But if I could show my iPhone then I get to…or if I could have my iPhone out in the supermarket, then I feel a lot cooler.

Interviewee: Yeah. Now I live in Silicon Valley and I have to be careful to not get wrapped up in what happens in Silicon Valley. It isn’t the way people shop around the entire country and you have to satisfy both. So in Des Moines, Iowa and in Davenport and in Milwaukee people are shopping with paper lists and paper more than they’re shopping with iPhones. And we have to make sure we satisfy all consumers. Again, it boils down to a very simple fact. Today, off our platform, consumers are saving upwards of $2,000 a year off their grocery bill. And that’s after-tax dollars. So take the combination of the economy and the unemployment rate, family feeding: $2000 a year of after tax savings is a tremendous amount of money to save for doing very little work.

Andrew: And what’s your revenue model? You guys take a cut of the savings? Do you charge for the interaction with the consumer? Is there something else?

Interviewee: There are a number of revenue factors that come into the company. We’re a clearing and processing firm. We’re a direct mail company. So we satisfy a lot of the services through the entire ecosystem of promotion marketing, both here and in Europe. But essentially, we get charged for transaction processing. So when coupons are issued we get paid for them.

Andrew: All right, we’re almost at the end but I’ve got to ask you if you’ve got another great sales story like that. I love that story of you sitting there and waiting in the lobby and just powering through until you get the sale.

Interviewee: That’s probably the best one. Another good one, although it certainly isn’t as good as sitting in a lobby, is showing up late for what I thought was a one-on-one meeting with a major pharmaceutical company on the East coast. Traffic was terrible, I showed up about ten minutes late. I got to the lobby and the person who greeted me was very fit and said, ‘I’m so glad you’re here, we’re all waiting for you.’ And I said, ‘Oh great. How many people are there?’ And she said, ‘About 40.’ And I said, ‘Oh! Okay. Sorry. I was unaware. I didn’t bring enough materials; I thought this was just a one-on-one meeting.’ And she turned around and started to sprint. And so she got to the end of a very long hallway and there was an elevator bank and a set of stairs.

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