Bootstrapping to $35M via Affiliate Fees: Swagbucks Co-founder Scott Dudelson (Part 1)

Scott Dudelson is the cofounder of Swagbucks.com, a premier rewards site that is a subsidiary to Prodégé. Prior to co-founding Swagbucks.com he founded Music for Charity Productions, a company which helped connect bands with charitable organizations. He graduated with a BA from UCLA.

Sramana: Scott, let’s start at the beginning of your story. Where are you from, and what kind of background leads up to the Swagbucks story?

Scott Dudelson: I am from Southern California. I graduated from UCLA. After UCLA I wanted to get into the music business, and my start was producing concerts. I love live music, and I felt that producing concerts would be a great way to continually be around live music. Shortly after graduation, I started a consulting company called Music for Charity Productions.

The goal of that company was to serve as a conduit between the music industry and the nonprofit world. I would get different bands connected with the organizations they supported the most. They would play benefit concerts, serve as spokespeople, or use various technologies to promote the causes they supported.

Sramana: When did you start Swagbucks?

Scott Dudelson: Swagbucks started two years after the company Prodégé, which is our parent company. My business partner and our CEO, Josef Gorowitz, had the original idea for Prodégé. That idea was to raise money for charities through search engines. At that time I had been raising money for organizations through benefits concerts. That was time-consuming and took a lot of effort with very little net benefit relative to the cost. Josef had the idea that technology could be used to raise money. That was the precursor to Swagbucks.com.

Sramana: How do you raise money through a search engine?

Scott Dudelson: The business model came from Google. You have a search engine with sponsored results, and when those were clicked, revenue would be generated. We made a deal whereby we were able to white-label search engines and give them to nonprofits. They would tell their supporters to do their searches, and their supporters would generate revenue for the nonprofits when they clicked on the sponsored links in the search results.

Sramana: Did that model work?

Scott Dudelson: When organizations adopted it and they got supporters to use it, they were able to generate money. The challenge is that business development was very difficult. This was in 2005 when Internet fundraising was not normal. It was difficult to convince nonprofits that this was an effective way of raising money. Once we had organizations signed up, it was still challenging to get them to promote it. We had metrics that proved that it was an effective way of raising money. There was a business there; the question was all about how to scale that business.

This segment is part 1 in the series : Bootstrapping to $35M via Affiliate Fees: Swagbucks Co-founder Scott Dudelson
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