Bootstrapping to $35M via Affiliate Fees: Swagbucks Co-founder Scott Dudelson (Part 5)

Sramana: What were the business models that you worked with for the incentive providers?

Scott Dudelson: We just bought the gift cards and the award items. We did try to get free goods. We had a business model that supported itself. When a user took an action that generates us money, he or she would be rewarded with Swagbucks. The Swagbuck was a percentage of what we earned that we gave back to the user. It was easy enough for us to just buy the items instead of trying to make strategic deals.

Sramana: What was the portfolio of items? Did you primarily offer gift cards?

Scott Dudelson: Early on it was a combination of gift cards and physical items. We used to have a warehouse where we would ship out things like coffeemakers and baseball cards. We had a wide variety [of items]. At this point, all we offer are gift cards.

Sramana: How many points does a user need to get to earn a gift card?

Scott Dudelson: Through Swagbucks there are 14 different ways you can earn points. Each of those methods has a different model associated with it. The base model is that when a user takes an action, such as making a purchase through an affiliate store or accepting a trial offer, then the advertiser will pay us a commission or lead. We then take a certain percentage of that revenue and give it back to the user in the form of Swagbucks, which can be redeemed for rewards. The most popular award is a 450 Swagbuck exchange for a $5 Amazon gift card. In theory, a user could get a 450 Swagbuck total in just a few days by watching a few videos, doing some surveys, and taking other basic actions. It is not impossible to accrue points.

Sramana: What are the 14 ways a user can accrue Swagbucks?

Scott Dudelson: Coupons are the first way. Users can print coupons from major merchants, and they receive Swagbucks when they use those coupons. We also have a daily deals platform where users can get deals from Eversafe, Tipper, Groupon and other daily deal providers. They will receive Swagbucks for those purchases.

Sramana: Do those types of deals require you to have partnership deals in place with those companies?

Scott Dudelson: In some cases we do, and in other cases we work with aggregators.

Sramana: What are some of the other ways users can accrue Swagbucks?

Scott Dudelson: Another vertical we have is a simple daily poll. Every day we ask a simple question and we are able to get aggregated demographic information. We don’t monetize on that, but we do offer our users Swagbucks for participating. We ask about our products, their likes and dislikes, and so forth.

The next category is games. We have 40 games on our website, and users can earn Swagbucks by playing these games. Each game has a video in front of it, and that is how we are able to monetize.

We also have a no-obligation, special offer tab. These offers change daily, and our users can go there once a day and see if there are special offers they would like to take advantage of. There is no obligation for them to sign up for anything; they get Swagbucks just for viewing the special offers.

Our newest offering is a shop-and-earn offering. Our customers can shop through stores like Kohls, Macy’s, Best Buy, Amazon, and Walmart and earn Swagbucks for their purchases. That is a true affiliate model where we receive a commission and we share that back with our users.

We have already discussed search, but that is a core way that users can earn Swagbucks.

Sramana: It seems like your entire business is sitting on top of a large collection of affiliate networks.

Scott Dudelson: There is a large affiliate component, but there are also a significant number of direct deals. The affiliate model is a driver of our business.

This segment is part 5 in the series : Bootstrapping to $35M via Affiliate Fees: Swagbucks Co-founder Scott Dudelson
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